-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TIGIA0swWNBoqedsue9tf5fdkYhSLeJ/ar0zG8UJ2SiJMhB0dxBaPoUHEaBS36kA BGfin0NXGwtA6RgThG9+Jw== 0001019056-99-000649.txt : 19991210 0001019056-99-000649.hdr.sgml : 19991210 ACCESSION NUMBER: 0001019056-99-000649 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 19991123 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19991208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMARKETPLACE INC CENTRAL INDEX KEY: 0000900475 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 330008870 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22014 FILM NUMBER: 99771052 BUSINESS ADDRESS: STREET 1: 255 WEST JULIAN STREET STREET 2: SUITE 100 CITY: SAN JOSE STATE: CA ZIP: 95110 BUSINESS PHONE: 9097352102 MAIL ADDRESS: STREET 1: 255 WEST JULIAN STREET STREET 2: SUITE 100 CITY: SAN JOSE STATE: CA ZIP: 95110 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER MARKETPLACE INC DATE OF NAME CHANGE: 19930413 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) NOVEMBER 23, 1999 ----------------- EMARKETPLACE, INC. ------------------------------------------------------ (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 0-14731 33-0558415 - -------------------------------------------------------------------------------- (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) FORMATION) 255 WEST JULIAN STREET, SUITE 100, SAN JOSE, CA 95110 ------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 295-6500 -------------- =============================================================== (FORMER NAME OR FORMER ADDRESS, IF CHANGES SINCE LAST REPORT) =============================================================== ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS. On November 23, 1999, eMarketplace, Inc. (the "Company") and its wholly owned subsidiary, TopTeam, Inc. ("TopTeam"), closed on the acquisition of six Internet consulting companies (the "Interactive Architects"). In connection with the acquisition of the Interactive Architects, the Company issued a total of 911,957 shares of its common stock in exchange for shares of common stock of each of the Interactive Architects. Concurrently therewith, (i) the Company contributed its newly purchased shares of the Interactive Architects to TopTeam in exchange for TopTeam's issuance of 3,200,000 shares of its common stock, and (ii) the stockholders of the Interactive Architects contributed all of the remaining outstanding shares of the Interactive Architects (the shares not purchased by the Company) to TopTeam in exchange for the issuance of 3,384,073 shares of TopTeam common stock. In connection with the acquisition of the Interactive Architects, the Company loaned TopTeam $1 million in exchange for which TopTeam issued to the Company a promissory note in the aggregate principal amount of $1 million. The note bears interest at a rate of seven percent (7%) per annum (the "Note"). Interest payments are due and payable monthly and the principal amount outstanding is due and payable on November 22, 2001. TopTeam is required to prepay the Note in full in the event that TopTeam consummates an initial public offering of its common stock which generates gross proceeds of not less than $25 million. As consideration for the issuance of the Note, the Company received 250,000 shares of TopTeam Common Stock. In addition, the Company purchased 250,000 shares of TopTeam Series A Convertible Preferred Stock for the total amount of $1 million. As a result of these transactions, (a) the Company presently owns (i) 3,450,100 shares of TopTeam common stock (50.5% of the total number of shares of TopTeam common stock outstanding), (ii) 250,000 shares TopTeam Series A Convertible Preferred Stock, and (iii) rights to purchase 3,200,000 shares of TopTeam common stock at a purchase price of $7.50 per share, and (b) TopTeam owns all of the outstanding shares of capital stock of each of the Interactive Architects. THE SERIES A CONVERTIBLE PREFERRED STOCK DESIGNATION AND AMOUNT; RANK. The shares of such series are designated as Series A Convertible Preferred Stock (the "Series A Preferred Stock") and the number of shares constituting such series is 250,000, all of which have been issued to the Company. The Series A Preferred Stock has a par value of $0.001 per share and ranks senior to TopTeam's common stock. DIVIDENDS. Holders of Series A Preferred Stock are entitled to receive cash dividends of $0.24 per share per annum payable on each February 1, May 1, August 1 and November 1, beginning February 1, 2000; provided however, that the dividends on the Series A Preferred Stock may not be less than the amount paid on any outstanding shares of common stock. LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution or winding up of the affairs of TopTeam, each share of Series A Preferred Stock shall have a liquidation preference of $4.00 per share plus unpaid dividends that have accrued to the date of payment, if any. REDEMPTION. Commencing on December 31, 2000, the holders of a majority of the shares of Series A Preferred Stock outstanding may require that TopTeam redeem the shares of Series A Preferred Stock held by them at a price equal to $4.00 per share plus accrued and unpaid dividends. CONVERSION. Each share of Series A Preferred Stock may be converted by a holder into one share of TopTeam common stock at any time on or prior to December 25, 2000, subject to certain anit-dilution adjustments. Each share of Series A Preferred Stock will be automatically converted into shares of common stock upon the earlier of (i) TopTeam's sale of common stock generating gross proceeds of not less than $25 million, (ii) the sale of all of substantially all of the assets or capital stock of TopTeam for aggregate consideration of at least $25 million, or (iii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A Preferred Stock. VOTING RIGHTS. Each holder of Series A Preferred Stock shall be entitled to vote for each share of common stock into which the Series A Stock could be converted. So long as not less than 20 percent of the Series A Preferred Stock originally issued is still outstanding, TopTeam may not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of Series A Preferred Stock; (b) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock; (c) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security having a preference over, or being on a parity with, the Series A Preferred Stock with respect to voting, dividends or upon liquidation; or (d) amend the TopTeam's Certificate of Incorporation, bylaws or Certificate of Designation with respect to the Series A Preferred Stock. The following is a brief description of the acquisition transactions involving each of the Interactive Architects. ACQUISITION OF FULL MOON INTERACTIVE GROUP, INC. As of November 5,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, Full Moon Interactive Group, Inc. ("Full Moon") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the Company acquired 520,740 shares of common stock of Full Moon (the " Full Moon Shares") in exchange for its issuance of 333,274 shares of the Company's common stock, (ii) TopTeam acquired 520,740 shares of common stock of Full Moon in exchange for its issuance of 1,099,803 shares of TopTeam, and (iii) 2 the Company contributed the Full Moon Shares to TopTeam in exchange for 1,099,803 shares of Common Stock of TopTeam. As a result, Full Moon became a wholly owned subsidiary of TopTeam; provided however, that certain employees of Full Moon hold options exercisable for Full Moon common stock. The Company and TopTeam anticipate exchanging in the near future 98,726 shares of Company common stock and 300,197 shares of TopTeam common stock for the shares of Full Moon common stock issuable upon the exercise of such options. ACQUISITION OF ORRELL COMMUNICATIONS, INC. As of November 10,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, Orrell Communications, Inc. ("Orrell Communications ") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the Company acquired 50,000 shares of common stock of Orrell Communications (the " Orrell Shares") in exchange for its issuance of 75,000 shares of the Company's common stock, (ii) TopTeam acquired 50,000 shares of common stock of Orrell Communications in exchange for its issuance of 300,000 shares of TopTeam, and (iii) the Company contributed the Orrell Shares to TopTeam in exchange for 300,000 shares of Common Stock of TopTeam. As a result, Orrell Communications became a wholly owned subsidiary of TopTeam. ACQUISITION OF DEVRIES DATA SYSTEMS, INC. As of November 10,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, DeVries Data Systems, Inc. ("DeVries ") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the Company acquired 2,700,000 shares of common stock of DeVries (the " DeVries Shares") in exchange for its issuance of 265,683 shares of the Company's common stock, (ii) TopTeam acquired 330,000 shares of common stock of DeVries in exchange for its issuance of 974,170 shares of TopTeam, and (iii) the Company contributed the DeVries Shares to TopTeam in exchange for 774,170 shares of Common Stock of TopTeam. As a result, DeVries became a wholly owned subsidiary of TopTeam; provided however, that certain employees of DeVries hold options exercisable for DeVries common stock. The Company and TopTeam anticipate exchanging in the near future 34,317 shares of Company common stock and 125,830 shares of TopTeam common stock for the shares of DeVries common stock issuable upon the exercise of such options. ACQUISITION OF MUCCINO DESIGN GROUP, INC. As of November 10,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, Muccino Design Group, Inc. ("Muccino ") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the Company acquired 3,613 shares of common stock of Muccino (the " Muccino Shares") in exchange for its issuance of 100,000 shares of the Company's common stock, (ii) TopTeam acquired 5,419 shares of common stock of Muccino in exchange for its issuance of 480,000 shares of TopTeam, and (iii) the Company contributed the Muccino Shares to TopTeam in exchange for 320,000 shares of Common Stock of TopTeam. As a result, Muccino became a wholly owned subsidiary of TopTeam. ACQUISITION OF IMAGE NETWORK, INC. As of November 9,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, Image Network, Inc.("Image Network") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the 3 Company acquired 40 shares of common stock of Image Network (the " Image Network Shares") in exchange for its issuance of 100,000 shares of the Company's common stock, (ii) TopTeam acquired 60 shares of common stock of Image Network in exchange for its issuance of 420,000 shares of common stock of TopTeam, and (iii) the Company contributed the Image Network Shares to TopTeam in exchange for 280,000 shares of Common Stock of TopTeam. As a result, Image Network became a wholly owned subsidiary of TopTeam. ACQUISITION OF ONCOURSE NETWORK, INC. As of November 19,1999, a Stock Purchase and Contribution Agreement was executed among the Company , TopTeam, OnCourse Network, Inc. ("OnCourse ") and the Sellers identified therein, pursuant to which on November 23, 1999 (i) the Company acquired 238,000 shares of common stock of OnCourse (the " OnCourse Shares") in exchange for its issuance of 38,000 shares of the Company's common stock, (ii) TopTeam acquired 238,000 shares of common stock of OnCourse in exchange for its issuance of 110,000 shares of TopTeam, and (iii) the Company contributed the OnCourse Shares to TopTeam in exchange for 110,000 shares of Common Stock of TopTeam. As a result, OnCourse became a wholly owned subsidiary of TopTeam. ITEM 5. OTHER EVENTS. As of November 23, 1999, TopTeam entered into an employment agreement with Fred H. Walti, pursuant to which Mr. Walti has agreed to serve as TopTeam's President and Chief Executive Officer for a period of five (5) years. Mr. Walti's base salary will be at a rate of $170,000 per annum and he is entitled to receive an annual cash bonus of up to 50% of his then current base salary upon the achievement of certain performance targets established by TopTeam's Board of Directors. Mr. Walti has also received options to purchase a total of 250,000 shares of TopTeam common stock at an exercise price of $7.50 per share, 50,000 shares of which vest immediately and the remainder of which vest in four equal amounts on November 23, 2000, 2001, 2002 and 2003. The employment agreement with Mr. Wilson contains other customary provisions including severance arrangements and confidentiality provisions. As of November 23, 1999, TopTeam entered into an employment agreement with Robert Wilson, pursuant to which Mr. Wilson has agreed to serve as TopTeam's Chief Financial Officer for a period of five (5) years. Mr. Wilson's base salary will be at a rate of $125,000 per annum and he is entitled to receive an annual cash bonus of up to 25% of his then current base salary upon the achievement of certain performance targets established by TopTeam's Board of Directors. Mr. Wilson has also received options to purchase a total of 125,000 shares of TopTeam common stock at an exercise price of $7.50 per share, 25,000 shares of which vest immediately and the remainder of which vest in four equal amounts on November 23, 2000, 2001, 2002 and 2003. The employment agreement with Mr. Wilson contains other customary provisions including severance arrangements and confidentiality provisions. On November 30, 1999, the Company closed its private offering of common stock which had commenced in July 1999. Pursuant to the offering, the Company issued a total of 826,225 shares of common stock raising gross proceeds of approximately $3,200,000. 4 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The Registrant intends to file required financial statement disclosure within 60 days following the date on which this Report on Form 8-K is required to be filed. (c) EXHIBITS. (i) Stock Purchase and Contribution Agreement dated as of November 5, 1999, by and among the Company, TopTeam, Full Moon Interactive Group, Inc. and the Sellers identified therein. (ii) Stock Purchase and Contribution Agreement dated as of November 10, 1999, by and among the Company, TopTeam, Orrell Communications, Inc. and the Sellers identified therein. (iii) Stock Purchase and Contribution Agreement dated as of November 10, 1999, by and among the Company, TopTeam, DeVries Data Systems, Inc. and the Sellers identified therein. (iv) Stock Purchase and Contribution Agreement dated as of November 10, 1999, by and among the Company, TopTeam, Muccino Design Group, Inc. and the Sellers identified therein. (v) Stock Purchase and Contribution Agreement dated as of November 9, 1999, by and among the Company, TopTeam, Image Network, Inc. and the Sellers identified therein. (vi) Stock Purchase and Contribution Agreement dated as of November 19, 1999, by and among the Company, TopTeam, OnCourse Network, Inc. and Kent Rhodes. (vii) Certificate of Designation with respect to the Series A Convertible Preferred Stock of TopTeam. (viii) Promissory Note issued by the Company dated November 23, 1999 in the principal amount of $1,000,000. (ix) Employment Agreement between TopTeam and Fred H. Walti, II, dated as of November 23, 1999. (x) Employment Agreement between TopTeam and Robert Wilson, dated as of November 23, 1999. 5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly authorized and caused the undersigned to sign this Report on the Registrant's behalf. EMARKETPLACE, INC. By: /s/ L. WAYNE KILEY ----------------------------------------------- Name: L. Wayne Kiley Title: Chief Executive Officer and President Dated: December 8, 1999 6 EX-1.C 2 EXHIBIT (C) (I) Execution Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC. FULL MOON INTERACTIVE GROUP, INC. AND THE SELLERS IDENTIFIED HEREIN Dated as of November 5, 1999 ================================================================================
TABLE OF CONTENTS PAGE ARTICLE I THE TRANSACTIONS AND RELATED MATTERS...................................................................1 1.1 Purchase and Exchange..................................................................................1 1.2 Contribution...........................................................................................1 1.3 Stock Certificates.....................................................................................2 1.4 Stock Option and Other Plans...........................................................................2 1.5 Tax Consequences.......................................................................................3 1.6 Closing ..............................................................................................3 1.7 Certificate of Incorporation of Top Team...............................................................3 1.8 By-Laws of Top Team....................................................................................3 1.9 Directors and Officers of Top Team.....................................................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY................................................................................3 2.1 Authorization..........................................................................................3 2.2 Ownership of Stock.....................................................................................4 2.3 Consents and Approvals.................................................................................4 2.4 Securities Matters.....................................................................................4 2.5 Brokerage Fees.........................................................................................5 2.6 Disclosure.............................................................................................5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS.........................................................................5 3.1 Due Organization, Good Standing and Corporate Power....................................................5 3.2 Authorization and Validity of Agreement................................................................6 3.3 Capitalization.........................................................................................6 3.4 Consents and Approvals; No Violations..................................................................7 3.5 Company Reports and Financial Statements...............................................................8 3.6 Absence of Certain Changes.............................................................................8 3.7 Minute Books...........................................................................................8 3.8 Title to Properties; Encumbrances......................................................................8 3.9 Compliance with Laws...................................................................................9 3.10 Litigation.............................................................................................9 3.11 Employee Benefit Plans.................................................................................9 3.12 Employment Relations and Agreements...................................................................11 3.13 Client Relations......................................................................................11 3.14 Taxes .............................................................................................11 3.15 Liabilities...........................................................................................12 3.16 Intellectual Properties...............................................................................12 3.17 Material Contracts and Relationships..................................................................13 3.18 Absence of Certain Business Practices.................................................................14
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3.19 Transactions with Related Parties.....................................................................15 3.20 Broker's or Finder's Fee..............................................................................15 3.21 Accounts Receivable...................................................................................15 3.22 Inventories...........................................................................................15 3.23 Insurance.............................................................................................16 3.24 No Powers of Attorney or Suretyships..................................................................16 3.25 Banking Facilities....................................................................................16 3.26 Environmental Liabilities.............................................................................16 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM..................................................................................18 4.1 Due Organization; Good Standing and Corporate Power...................................................18 4.2 Authorization and Validity of Agreement...............................................................18 4.3 Consents and Approvals; No Violations.................................................................18 4.4 EMKT Reports and Financial Statements.................................................................19 4.5 Capitalization........................................................................................19 4.6 Absence of Certain Changes............................................................................20 4.7 Compliance with Laws..................................................................................20 4.8 Liabilities...........................................................................................20 4.9 Litigation............................................................................................20 ARTICLE V ACTIONS PRIOR TO CLOSING DATE.........................................................................20 5.1 Access to Information Concerning Properties and Records...............................................20 5.2 Conduct of the Business of the Company Pending the Closing Date.......................................21 5.3 Best Efforts..........................................................................................22 5.4 No Solicitation of Other Offers.......................................................................22 5.5 Credit Facility.......................................................................................22 5.6 EMKT Contribution to Top Team Capital.................................................................23 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS..................................................................23 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers..................................................................................23 6.2 Conditions Precedent to Obligations of EMKT and Top Team..............................................23 6.3 Conditions Precedent to Obligations of the Company and the Sellers....................................24 ARTICLE VII TERMINATION AND ABANDONMENT...........................................................................25 7.1 Termination...........................................................................................25 7.2 Effect of Termination.................................................................................25 ARTICLE VIII INDEMNIFICATION.......................................................................................26 8.1 Indemnification by Sellers............................................................................26 8.2 Indemnification by Sellers Jointly and Severally......................................................26 8.3 Indemnification by EMKT and Top Team..................................................................27 8.4 Indemnification by Sellers for Tax Liabilities........................................................27
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8.5 Claims for Indemnification............................................................................28 8.6 Defense Claims........................................................................................28 8.7 Manner of Indemnification.............................................................................29 8.8 Limitations on Indemnification........................................................................29 ARTICLE IX MISCELLANEOUS.........................................................................................29 9.1 Fees and Expenses.....................................................................................29 9.2 Representations and Warranties........................................................................29 9.3 Extension; Waiver.....................................................................................30 9.4 Public Announcements..................................................................................30 9.5 Notices .............................................................................................30 9.6 Entire Agreement......................................................................................31 9.7 Binding Effect; Benefit; Assignment...................................................................31 9.8 Amendment and Modification............................................................................32 9.9 Further Actions.......................................................................................32 9.10 Headings .............................................................................................32 9.11 Counterparts..........................................................................................32 9.12 Applicable Law........................................................................................32 9.13 Severability..........................................................................................32 9.14 "Person" Defined......................................................................................32
iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT, dated as of November 5, 1999 (this "AGREEMENT"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), FULL MOON INTERACTIVE GROUP, INC., a California corporation (the "COMPANY"), and each of the other persons identified under the heading "Sellers" on the signature pages of this Agreement (together, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own all of all of the issued and outstanding shares of common stock ("COMPANY STOCK") of the Company. B. EMKT wishes to acquire from the Sellers and the Optionees referred to below an aggregate of 642,500 shares of Company Stock in exchange for an aggregate of 432,000 shares of EMKT common stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT, the Sellers and the Optionees will contribute all of their Company Stock to Top Team in exchange for an aggregate of 2,800,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE AND EXCHANGE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell, and on the Option Closing Date (as defined in Section 1.6) the Sellers shall cause each of the Optionees to sell, to EMKT that number of shares of Company Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 50 percent of the number of outstanding shares of Company Stock (on a fully diluted basis)(collectively, the "PURCHASE"), for a consideration equal to that number of EMKT shares set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1, (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 1,400,000 shares of Top Team Stock and (ii) each Seller shall contribute to Top Team all of his, her or its remaining Company Stock constituting (with the Optionee's remaining stock) in the aggregate the remaining 50 percent of the outstanding shares of Company Stock (on a fully diluted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's name on Schedule 1.1. On the Option Closing Date, each Optionee shall contribute to Top Team all of his, her or its remaining Company Stock . Such exchanges are 1 referred to collectively herein as the "EXCHANGE." The Sellers and the Optionees will receive an aggregate of shares of 1,400,000 shares of Top Team Stock. Such shares of Company Stock contributed to Top Team are referred to herein as the "CONTRIBUTED STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller shall deliver to EMKT, and on the Option Closing Date, each Optionee shall deliver to EMKT, certificates evidencing their respective shares of Contributed Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date and to each Optionee on the Option Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to the Option Closing Date, accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. On the Option Closing Date, each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Stock that is outstanding and unexercised immediately prior to Option Closing Date shall be deemed to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement (other than the first sentence of Section 2.4(b)) as if he, she or it were a Seller hereunder (each, a "JOINDER AGREEMENT"). In addition, the Company shall cause the Common Stock Warrant Agreements, each dated November 1, 1999 issued to Grand Pacific Financing Corporation and Grand Pacific Finance Corporation (the "GP WARRANTS") to be exercised prior to or concurrent with the Closing. (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary, except for the GP Warrants (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in Section 8.1), to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that after the 2 Option Closing Date, the only rights of the holders of Options to purchase shares of Company Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange Consideration, together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.5, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock from the Sellers and the exchange by the Sellers and EMKT of the Contributed Stock for the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Sections 6.1-6.3 are fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). The closing (the "OPTION CLOSING") of the purchase of the Purchased Company Stock from the Optionees and the exchange by the Optionees and EMKT of the Contributed Stock for the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Section 6.4 are fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "OPTION CLOSING DATE"). 1.7 CERTIFICATE OF INCORPORATION OF TOP TEAM. The Certificate of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. 3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule 1.1, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team, except for security interests in favor of the Company with respect to certain notes issued to the Optionees in connection with the exercise of their Company Options. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not be 4 registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller (other than Pamela Flank) is (i) either an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act or (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or (iii) has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions. Such Seller is aware that the Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without registration under the Securities Act and the California Law, and any other applicable securities laws, or without an opinion of counsel satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. 5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS The Company and each of the Sellers hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each Subsidiary of the Company. (A "SUBSIDIARY" of a Person is a corporation, partnership, joint venture, limited liability company and other entity in which such Person owns all or a majority of the equity interest or is required to be consolidated on such Person's balance sheet pursuant to GAAP.) The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the California General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 20,000,000 shares of common stock, constituting the Company Stock, and 5,000,000 shares of preferred stock, (the "PREFERRED STOCK"). As of the date of this 6 Agreement, (i) 1,041,480 shares of Company Stock are issued and outstanding, (ii) 243,520 shares of Company Stock are reserved for issuance pursuant to outstanding Company Options granted under the Company Stock Option Plans and (iii) no shares of Preferred Stock are issued and outstanding. Except as set forth on Schedule 3.3, all issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Company Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Common Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth in Schedule 3.4, (a) the execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Amended and Restated of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to such Seller or the Company or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority, except with respect to the filing of a Form D pursuant to Rule 503 of Regulation D under the Securities Act and any corresponding state "blue sky filings"; or (4) result in a violation or 7 breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (b) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Amended and Restated Articles of Incorporation or ByLaws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the consolidated statement of operations, consolidated statement of stockholders' equity and consolidated statement of cash flow for the fiscal years ended July 31, 1999 in the form attached as an exhibit to Schedule 3.5 were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and, in the case of such interim statements, subject to normal year-end adjustments, and as may be indicated in the notes thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the results of their operations and cash flows for the period then ended. 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since July 31, 1999 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 8 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the shareholders and Boards of Directors of the Company and its Subsidiaries since the date of incorporation of the Company. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set forth on Schedule 3.8, the Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of July 31, 1999 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the Balance Sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 3.9 COMPLIANCE WITH LAWS. To the best knowledge of the Company and the Sellers, the Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending or, to the best knowledge of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the 9 Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) CERTAIN PLANS. The Company has no Employee Benefit Plans which are subject to Title IV of ERISA and which are Single Employer Plans (as defined in Section 4001(a)(15) of ERISA). (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so 10 qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) all Employee Benefit Plans as in effect, together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or to the best knowledge of the Company and the Sellers threatened against or involving the Company or any of its Subsidiaries; (iv) no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and to the best knowledge of the Company and the Sellers no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty since the date of incorporation of the Company. There is not now and to the best knowledge of the Company and the Sellers, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the 11 Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. There has not been, and to the best knowledge of the Company, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries have been fully paid or adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. The Company has not received any notice of any issue being raised since the date incorporation of the Company by any federal, state, local or foreign taxing authority that, if raised with respect to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. No examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in the Balance Sheet or 12 referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. For purposes of this Section 3.11, "INTELLECTUAL PROPERTY" means domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information. Schedule 3.16 contains an accurate and complete list of all Intellectual Property which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are indicated in Schedule 3.16 and such registrations, filings and issuances remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; 13 (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries, subject as to enforceability to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally and to general principals of equity. There are no material liabilities of the Company or to the best knowledge of the Company and the Sellers any other party to any Material Contract arising from any breach or default of any provision thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by the Company or to the best knowledge of the Company and the Sellers any other party thereto. 14 (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) and (d) set forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. (e) To the best knowledge of the Company, the Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor any of its Subsidiaries nor any employee, agent or other Person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since the date of incorporation of the Company and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since the date of incorporation of the Company. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 15 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. The accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $100,000 and except as the collectibility thereof is affected by any future bankruptcy, insolvency or similar proceeding with respect to any account debtor) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to the best knowledge of the Company and the Sellers no defenses, rights of setoff, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The Company has no inventories. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies since the date of incorporation of the Company (other than worker's compensation claims). In the reasonable business judgment of the Company and the Sellers, the Company (together with its Subsidiaries) has adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, such insurance is, in the reasonable business judgment of the Company and the Sellers, adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. There are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company since the date of incorporation of the Company canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the best knowledge of the Company and the Sellers, no such cancellation, amendment or increase of premiums is threatened. 16 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best knowledge of the Company and the Sellers, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation AcT ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. 17 (b) To the best knowledge of the Company and the Sellers (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries since the date of incorporation of the Company and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. The Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition, except for reasonable wear and tear, and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted or proposed to be conducted. 18 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms, except that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, and general equitable principles. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT, Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Convertible 19 Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, and options to purchase 2,200,000 shares of Top Team Stock are reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans. Except as set forth on Schedule 4.5, in Section 5.5 and in this Section 4.5, there are not as of the date hereof, and as of the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to any other shares of capital stock of Top Team, pursuant to which Top Team is or may become obligated to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of Top Team. Top Team and EMKT have entered into letters of intent or agreements to acquire five other companies in the interactive architecture business identified on Schedule 4.5 (together with the Transactions, the "ROLL-UP"). Schedule 4.5 sets forth the PRO FORMA capitalization of Top Team following the Roll-Up and the contribution by EMKT to the capital of Top Team of certain property, as described in Section 5.5. 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or 20 proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, each of the Company and EMKT shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford the other, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries or EMKT and its Subsidiaries (as applicable) in order that they may have the opportunity to make such investigations as they shall desire of the affairs thereof; such investigation shall not, however, affect the representations and warranties made by the Company or EMKT in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any reasonable way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time reasonably request. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by EMKT, during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business and will use their commercially reasonable best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Amended and Restated Articles of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or 21 securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices; (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries and employees in the ordinary course of business and not to exceed $25,000 in the aggregate outstanding at any time; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective commercially reasonable best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective commercially reasonable best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team. 22 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. 5.5 EMKT CONTRIBUTION TO TOP TEAM CAPITAL. Simultaneously with the Closing, EMKT shall contribute $2,000,000 to the capital of Top Team in exchange for (i) 250,000 shares of Top Team Stock, (ii) 250,000 shares of Top Team Preferred Stock, having the powers, preferences and rights set forth in Schedule 5.5, and (iii) rights, expiring on the six-month anniversary of the Closing Date, to purchase 3,600,000 shares of Top Team Stock at a purchase price of $7.50 per share. $1,000,000 of such cash will be available by Top Team to fund the line of credit referred to in Section 6.3(f). ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: 23 (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENTS. Fred Walti and Robert Wilson shall have entered into employment agreements with Top Team in form and substance satisfactory to Top Team; (d) LEGAL OPINION. EMKT and Top Team shall have received an opinion of Troop Steuber Pasich Reddick & Tobey, LLP, counsel to the Company in form and substance acceptable to EMKT and Top Team; (e) JOINDER AGREEMENTS. Each Optionee shall have executed a Joinder Agreement in form and substance satisfactory to EMKT; and (f) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS. The obligation of the Company and the Sellers to effect the Transactions is also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENTS. Fred Walti and Robert Wilson shall have entered into employment agreements with Top Team in form and substance satisfactory to Messrs. Walti and Wilson, respectively; (d) STOCK INCENTIVE PLANS. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up 24 to 100,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; (e) REGISTRATION RIGHTS. (i) EMKT and the Sellers shall have entered into an agreement regarding "piggyback" registration rights for the Purchase Consideration, which rights shall be subject to customary underwriters' cut-backs and which shall be PARI PASSU with respect to other registration rights granted by EMKT, whether prior or subsequent to the Closing Date; (ii) Top Team and the Sellers shall have entered into an agreement regarding "piggyback" registration rights for the Exchange Consideration, which rights shall be subject to customary underwriters' cut-backs and which shall be PARI PASSU with respect to other registration rights granted by Top Team, whether prior or subsequent to the Closing Date Such agreement shall also provide for a single "demand" registration right beginning September 30, 2000 if Top Team shall not have filed prior to such date a registration statement under the Securities Act under which the Sellers have had the opportunity to register the Exchange Consideration; (f) CREDIT FACILITY. Top Team shall make available to the Company a line of credit in the amount of $1,000,000, evidenced by a revolving promissory note having a term of 24 months and bearing interest at a rate of 10% per annum; (g) LEGAL OPINION. The Company and the Sellers shall have received an opinion of Kaye, Scholer, Fierman, Hays and Handler, LLP, counsel to EMKT and Top Team, in form and substance acceptable to the Company and the Sellers; and (h) INDEMNITY AGREEMENT. Top Team and Fred Walti shall have entered an indemnity agreement with respect to certain obligations of the Company personally guaranteed by Fred Walti. 6.4 CONDITIONS TO THE OPTION CLOSING. The respective obligations of EMKT and Top Team, on the one hand, and the Optionees, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Option Closing Date of each of the following conditions: (a) CLOSING. The Closing shall have occurred; and (b) SECURITIES LAWS. The Purchase and Exchange with respect to the Optionee's Company Stock shall have been registered and qualified or exempt from registration and qualification under the Securities Act, the California Law and any other applicable securities or "blue sky" law. 25 ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within 90 days after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team or the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the prime rate as reported from time to time by Bank of America NT & SA (the "PRIME 26 RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Article II or III of this Agreement; (b) Any misrepresentation contained in any certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder in excess of $50,000. 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of 18 months from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Any breach of any representation or warranty made by the Sellers or the Company in Article III of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder in excess of $50,000. 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of 18 months from the Closing Date, jointly and severally, indemnify and hold harmless each of the Sellers in respect of any and all claims, losses, 27 damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT or Top Team for all claims hereunder in excess of $50,000. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis (and after taking into account any insurance proceeds to which EMKT or Top Team is entitled hereunder) EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by 28 a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of their respective Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 29 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire 18 months after the date hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such 18 months after the date hereof identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. The liability of any Seller shall not exceed the value of the Consideration received by such Seller. ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $50,000. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a material breach of the representations or warranties of EMKT or Top Team or a failure of EMKT or Top Team to fulfill a material covenant contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to the costs of the Audit, but not to exceed $20,000. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT or Top Team, may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 30 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: Full Moon Interactive Group, Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: Troop Steuber Pasich Reddick & Tobey, LLP 2029 Century Park East, 24th Floor Los Angeles, California 90067 Attention: V. Joseph Stubbs, Esq. Fax: 310-728-2243 (b) if to any Seller to his, her or its address on the signature pages hereof with a copy to: Troop Steuber Pasich Reddick & Tobey, LLP 2029 Century Park East, 24th Floor Los Angeles, California 90067 Attention: V. Joseph Stubbs, Esq. Fax: 310-728-2243 (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 31 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 32 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 9.11 COUNTERPARTS.This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers (if applicable) hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ Robert M. Wallace ---------------------------------------- Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ Robert M. Wallace ---------------------------------------- Robert M. Wallace, Chairman of the Board of Directors 33 THE COMPANY: FULL MOON INTERACTIVE GROUP, INC. By: /s/ Fred Walti ---------------------------------------- Fred Walti President SELLERS: /s/ Fred Walti --------------------------------------------- Fred Walti Address: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 /s/ Nancy Johnston --------------------------------------------- Nancy Johnston Address: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 /s/ Randal Walti --------------------------------------------- Randal Walti, Trustee of the Walti Family Trust, 1996 Address: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 /s/ Pamela Flank --------------------------------------------- Pamela Flank Address: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 34 GRAND PACIFIC FINANCING CORPORATION By: /s/ Michael Lin ---------------------------------------- Michael Lin, President Address: 3501 Challenger Street, 2nd Floor Torrance, CA 90503 GRAND PACIFIC FINANCE CORPORATION By: /s/ Michael Lin ---------------------------------------- Michael Lin, President Address: 41-99 Main Street, 2nd floor Flushing, New York 11355 35 EX-2.C 3 EXHIBIT (C)(II) Execution Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC., ORRELL COMMUNICATIONS, INC. AND THE SELLERS IDENTIFIED HEREIN Dated as of November 10, 1999 ================================================================================ 1
TABLE OF CONTENTS Page ARTICLE I THE TRANSACTIONS AND RELATED MATTERS...................................1 1.1 Purchase and Exchange..................................................1 1.2 Contribution...........................................................1 1.3 Stock Certificates.....................................................2 1.4 Stock Option and Other Plans...........................................2 1.5 Tax Consequences.......................................................3 1.6 Closing................................................................3 1.7 Certificate of Incorporation of Top Team...............................3 1.8 By-Laws of Top Team....................................................3 1.9 Directors and Officers of Top Team.....................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY...........................................................4 2.1 Authorization..........................................................4 2.2 Ownership of Stock.....................................................4 2.3 Consents and Approvals.................................................4 2.4 Securities Matters.....................................................4 2.5 Brokerage Fees.........................................................5 2.6 Disclosure.............................................................5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS.........................................6 3.1 Due Organization, Good Standing and Corporate Power....................6 3.2 Authorization and Validity of Agreement................................6 3.3 Capitalization.........................................................6 3.4 Consents and Approvals; No Violations..................................7 3.5 Company Reports and Financial Statements...............................8 3.6 Absence of Certain Changes.............................................8 3.7 Minute Books...........................................................9 3.8 Title to Properties; Encumbrances......................................9 3.9 Compliance with Laws...................................................9 3.10 Litigation.............................................................9 3.11 Employee Benefit Plans................................................10 3.12 Employment Relations and Agreements...................................12 3.13 Client Relations......................................................12 3.14 Taxes.................................................................12 3.15 Liabilities...........................................................13 3.16 Intellectual Properties...............................................13 3.17 Material Contracts and Relationships..................................14
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3.18 Absence of Certain Business Practices.................................16 3.19 Transactions with Related Parties.....................................16 3.20 Broker's or Finder's Fee..............................................16 3.21 Accounts Receivable...................................................16 3.22 Inventories...........................................................17 3.23 Insurance.............................................................17 3.24 No Powers of Attorney or Suretyships..................................17 3.25 Banking Facilities....................................................17 3.26 Environmental Liabilities.............................................18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM..................................................................19 4.1 Due Organization; Good Standing and Corporate Power...................19 4.2 Authorization and Validity of Agreement...............................19 4.3 Consents and Approvals; No Violations.................................20 4.4 EMKT Reports and Financial Statements.................................20 4.5 Capitalization........................................................20 4.6 Absence of Certain Changes............................................21 4.7 Compliance with Laws..................................................21 4.8 Liabilities...........................................................21 4.9 Litigation............................................................21 4.10 Tax Status............................................................21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE.........................................22 5.1 Access to Information Concerning Properties and Records...............22 5.2 Conduct of the Business of the Company Pending the Closing Date.......22 5.3 Best Efforts..........................................................23 5.4 No Solicitation of Other Offers.......................................23 5.5 EMKT Contribution to Top Team Capital.................................24 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS..................................24 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers...........................................24 6.2 Conditions Precedent to Obligations of EMKT and Top Team..............24 6.3 Conditions Precedent to Obligations of the Company and the Sellers....25 6.4 Conditions to the Option Closing......................................26 ARTICLE VII TERMINATION AND ABANDONMENT...........................................26 7.1 Termination...........................................................26 7.2 Effect of Termination.................................................27
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ARTICLE VIII INDEMNIFICATION.......................................................27 8.1 Indemnification by Sellers............................................27 8.2 Indemnification by Sellers Jointly and Severally......................28 8.3 Indemnification by EMKT and Top Team..................................28 8.4 Indemnification by Sellers for Tax Liabilities........................29 8.5 Claims for Indemnification............................................29 8.6 Defense Claims........................................................29 8.7 Manner of Indemnification.............................................30 8.8 Limitations on Indemnification........................................30 ARTICLE IX MISCELLANEOUS.........................................................30 9.1 Fees and Expenses.....................................................30 9.2 Representations and Warranties........................................31 9.3 Extension; Waiver.....................................................31 9.4 Public Announcements..................................................31 9.5 Notices...............................................................31 9.6 Entire Agreement......................................................33 9.7 Binding Effect; Benefit; Assignment...................................33 9.8 Amendment and Modification............................................33 9.9 Further Actions.......................................................33 9.10 Headings..............................................................33 9.11 Counterparts..........................................................33 9.12 Applicable Law........................................................33 9.13 Severability..........................................................33 9.14 "Person" Defined......................................................34
iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT dated as of November 10, 1999 (this "AGREEMENT"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), ORRELL COMMUNICATIONS., a California corporation (the "COMPANY"), and each of the other persons identified under the heading "Sellers" on the signature pages of this Agreement (together, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own of all of the issued and outstanding shares of capital stock of the Company, consisting of common stock ("COMPANY STOCK") of the Company. B. EMKT wishes to acquire from the Sellers an aggregate of 50,000 shares of Company Stock, constituting in the aggregate 50 percent of the number of outstanding shares of Company Stock (on a fully diluted basis), in exchange for an aggregate of 75,000 shares of EMKT Common Stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT and the Sellers will contribute all of their Company Stock to Top Team in exchange for an aggregate of 600,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM COMMON STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE AND EXCHANGE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell to EMKT that number of shares of Company Common Stock set forth opposite such Seller's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 50 percent of the number of outstanding shares of Company Stock (on a fully diluted and converted basis) (the "PURCHASE"), for a consideration equal to that number of EMKT shares set forth opposite such Seller's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1, (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 300,000 shares of Top Team Stock and (ii) each Seller shall contribute to Top Team all of his, her or its remaining Company Stock, constituting in the aggregate the remaining 50 percent of the outstanding shares of Company Stock (on a fully diluted and converted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's name on Schedule 1.1. Such exchanges are referred to collectively herein as the "EXCHANGE." The Sellers will receive an 1 aggregate of 300,000 shares of Top Team Stock. Such shares of Company Stock contributed to Top Team are referred to herein as the "CONTRIBUTED STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller shall deliver to EMKT certificates evidencing their respective shares of Contributed Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to the Closing Date, use its commercially reasonable best efforts to accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Common Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. On the Closing Date, the Company shall use its commercially reasonable best efforts to cause each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Common Stock that is outstanding and unexercised immediately prior to Closing Date to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Option Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "JOINDER AGREEMENT"). (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all commercially reasonable steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in Section 8.1), to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect thereof. The Company will use its commercially reasonable best efforts to obtain all necessary consents to ensure that after the Closing Date, the only rights of the holders of Options to purchase shares of Company Common Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange 2 Consideration, together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.5, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock from the Sellers and the exchange by the Sellers and EMKT of the Contributed Stock for the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Article VI are fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). 1.7 ARTICLES OF INCORPORATION OF TOP TEAM. The Articles of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Articles of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule 1.1, free and clear 3 of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team in connection with the Transactions. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been or prior to the Closing will have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not (except with respect to certain registration rights to be granted to the Sellers pursuant to the Registration Rights Agreement referred to in Section 6,3(e)) be registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller is either (i) an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act, (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or 4 (iii) has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions; such Seller is aware that the Merger Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without either (i) registration under the Securities Act and the California Law, and any other applicable securities laws, or (ii) an opinion of counsel reasonably satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS The Company and each of the Sellers hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each Subsidiary of the Company. (A "SUBSIDIARY" of a Person is a corporation, partnership, joint venture, limited liability company and other entity in which such Person owns all or a majority of the equity interest or is required to be consolidated on such Person's balance sheet pursuant to GAAP.) The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in 5 such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been or prior to the Closing will be duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the California General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 100,000 shares of common stock constituting the Company Common Stock. As of the date of this Agreement, (i) no shares of Company Common Stock are issued and outstanding and (ii) no shares of Company Common Stock are reserved for issuance pursuant to outstanding Company Options granted under the Stock Incentive Plan. All issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Company Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Common Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, 6 obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. (a) The execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Articles of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) to the best knowledge of the Company and the Sellers violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to the Company or such Seller or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) to the best knowledge of the Company and the Sellers require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (b) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Certification of Incorporation or By-Laws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) to the best knowledge of the Company and the Sellers any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 7 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheet as of the end of the fiscal year ended June 31, 1999 and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year ended July 31, 1999 previously delivered to EMKT, were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the date thereof and the results of their operations and cash flows for the period then ended. 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since December 31, 1998 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the stockholders and Boards of Directors of the Company and its Subsidiaries since December 31, 1995. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. Except as disclosed in Schedule 3.8, the Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of December 31, 1998 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the Balance Sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 8 3.9 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending or, to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 9 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) RELATIONSHIP OF ACCRUED BENEFITS TO PENSION PLAN ASSETS. As ofthe Balance Sheet Date, (1) the aggregate current value of all accrued benefits (based upon actuarial assumptions which have been furnished to and relied upon by EMKT, Top Team and Sub) under all Employee Benefit Plans which are subject to Title IV of ERISA and which are Single Employer Plans (as defined in Section 4001(a)(15) of ERISA) did not exceed the aggregate current value of all assets of such Single Employer Plans allocable to such accrued benefits, and the Balance Sheet Date, there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, change in applicable law or otherwise, which individually or in the aggregate, would create any such excess; and (2) using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Company and its Subsidiaries to all such Employee Benefit Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each Multiemployer Plan ended prior to the date hereof, would not exceed $50,000. There has been no material change in the financial condition of any Multiemployer Plan or in any such actuarial assumption or computation method or in benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the 10 Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) all Employee Benefit Plans as in effect, together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Except as set forth on Schedule 3.12, to the best knowledge of the Company and the Sellers, each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or to the best knowledge of the Company and the Sellers threatened against or involving the Company or any of its Subsidiaries; (iv) to the best knowledge of the Company and the Sellers no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) to the best knowledge of the Company and the Sellers no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty during the last three years. There has not been, and to the best knowledge of the Company, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. Except as set forth on Schedule 3.13, there has not been, and to the best knowledge, information and belief of the Company 11 and the Sellers, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries prior to the Closing Date. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries or reports due prior to the Closing Date have been fully paid or adequately disclosed. Tax liabilities for the period ending on the Closing Date have been adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. To the best knowledge of the Company and the Sellers, no issue has been raised during the past five years by any federal, state, local or foreign taxing authority that, if raised with respect to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. The federal income tax liability of the Company and its Subsidiaries has been finally determined for all fiscal years to and including the fiscal year ended December 31, 1998. To the best knowledge of the Company and the Sellers, no examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Except as set forth on Schedule 3.15, neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, 12 except as set forth in the Balance Sheet or referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. In the operation of its business the Company and its Subsidiaries have used, and currently use, domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information (collectively the "INTELLECTUAL PROPERTY"). Schedule 3.16 contains an accurate and complete list of all Intellectual Property (other than trade secrets and other confidential information) which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are indicated in Schedule 3.16 and such registrations, filings and issuances remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge, information and belief of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: 13 (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries. To the best knowledge of the Company and the Sellers, there are no material liabilities of any party to any Material Contract arising from any breach or default of any provision 14 thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by any party thereto. (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) sets forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. (e) To the best knowledge of the Company and the Sellers, the Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth on Schedule 3.18, neither the Company nor any of its Subsidiaries nor any employee, agent or other person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since January 1, 1994 and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since January 1, 1994. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions contemplated hereby. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers 15 and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 3.21, the accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $25,000) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to no defenses, rights of setoff, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The inventories reflected in the Balance Sheet were, and those reflected on the books of the Company since such date have been, determined and valued in accordance with generally accepted accounting principles applied on a consistent basis as reflected in the consolidated balance sheet, and existed on the respective dates. The inventories of the Company consist of items which are good and merchantable, and are of a quality and quantity presently usable or salable in the ordinary course of business. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies during the past five years (other than worker's compensation claims). The Company (together with its Subsidiaries) has to the best knowledge of the Company and the Sellers adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, the Company reasonably believes that such insurance is adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. To the best knowledge of the Company and the Sellers there are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company 16 or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company within the five years preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the knowledge of the Sellers and the Company, no such cancellation, amendment or increase of premiums is threatened. 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best of the Company's and the Sellers' knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide AcT ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment 17 and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. (b) To the best of the Company's and Sellers' knowledge (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the business or condition (financial or otherwise) of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries during the past five years and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. Except as set forth on Schedule 3.27, the Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms, except that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, and general equitable principles. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT or Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions 19 (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement, (i) 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, and options to purchase 2,200,000 shares of Top Team Stock have been reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans. Except as set forth on Schedule 4.5, in Section 5.5 and in this Section 4.5, there are not as of the date hereof, and as of the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to any other shares of capital stock of Top Team, pursuant to which Top Team is or may become obligated to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of Top Team. Top Team and EMKT have entered into letters of intent or agreements to acquire five other companies in the interactive architecture business identified on Schedule 4.5 (together with the Transactions, the "ROLL-UP"). Schedule 4.5 sets forth the PRO FORMA capitalization of Top Team following the Roll-Up and the contribution by EMKT to the capital of Top Team of certain property, as described in Section 5.5. 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by the EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 20 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. 4.10 TAX STATUS. Neither EMKT nor Top Team has taken any action that would cause the Purchase not to qualify as an installment sale for federal income tax purposes or to cause the Exchange not to qualify as a tax-free contribution to capital under Section 351 of the Code. ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford EMKT and Top Team, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its Subsidiaries; such investigation shall not, however, affect the representations and warranties made by the Company in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time request. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or Schedule 5.2 or otherwise consented to or approved in writing by EMKT (which consent shall not be unreasonably withheld, delayed or conditioned), during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of 21 business and will use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Articles of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices, except that the Company may prepay its legal fees in connection with the Transactions to the extent they do not exceed the amount set forth in Section 9.1(a); (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 22 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective commercially reasonable best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team (which shall not be unreasonably withheld or delayed). 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. 5.5 EMKT CONTRIBUTION TO TOP TEAM CAPITAL. Simultaneously with the Closing, EMKT shall contribute $2,000,000 in cash to the capital of Top Team in exchange for (i) 250,000 shares of Top Team Stock, 250,000 shares of Top Team Preferred Stock, having the powers, preferences and rights set forth in Schedule 5.5, and (iii) rights, expiring on the six-month anniversary of the Closing Date, to purchase 3,600,000 shares of Top Team Stock at a purchase price of $7.50 per share. ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: 23 (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENT. Lisa Orrell shall have entered into an employment agreement with Top Team in form and substance reasonably satisfactory to Top Team; (d) LEGAL OPINION. EMKT and Top Team shall have received an opinion of Landels, Ripley & Diamond, counsel to the Company, in form and substance reasonably acceptable to EMKT and Top Team; (e) JOINDER AGREEMENTS. Each Optionee shall have executed a Joinder Agreement in form and substance reasonably satisfactory to EMKT; and (f) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS. The obligations of the Company and the Sellers to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be 24 true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; and (c) STOCK INCENTIVE PLAN. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up to 30,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; and (d) REGISTRATION RIGHTS. Top Team and Sellers shall have entered into an agreement regarding registration rights for the Purchase Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. EMKT and Sellers shall have entered into an agreement regarding registration rights for the Exchange Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof; (e) LEGAL OPINION. The Company and the Seller shall have received an opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to EMKT and Top Team, in form and substance reasonably acceptable to the Company and the Sellers. ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within six months after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to 25 or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team, the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller, for a period of three years from the date hereof, shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the prime rate as reported from time to time by Bank of America NT & SA (the "PRIME RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Article II or III of this Agreement; (b) Any misrepresentation contained in any written statement or certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder relating back to the first dollar. 26 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of three years from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Subject to Section 8.4 hereof, any breach of any representation or warranty made by the Sellers or the Company in Article III of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any written statement or certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder relating back to the first dollar. 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of three years from the Closing Date, jointly and severally, indemnify and hold harmless each of Sellers in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. 27 No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT or Top Team for all claims hereunder relating back to the first dollar. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect, but not for losses due to any action or inaction taken or required to be taken by EMKT or Top Team hereunder. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim 28 involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of their respective Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire on the third anniversary hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such third anniversary and identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. 29 ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $20,000, and the Sellers will pay for the amount in excess thereof. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a wilful and material breach of the representations or warranties of EMKT or Top Team or a wilful failure of EMKT or Top Team to fulfill a material covenant or contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to $40,000 plus the actual costs of the Audit. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT, Top Team or Sub, may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be 30 in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: Orrell Communications, Inc. 700 Gale Drive, No. 100 Campbell, California 95008 Attention: President Fax: 408-871-3593 with a copy to: Landels, Ripley & Diamond 350 The Embarcadero Hills Plaza San Francisco, California 94105-1250 Attention: Stanford Mattews, Esq. (b) if to any Seller to his, her or its address on the signature pages hereof (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 31 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 9.11 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, 32 unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers (if applicable) hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors THE COMPANY: ORRELL COMMUNICATIONS, INC. By: /s/ Lisa Orrell -------------------------------------- Lisa Orrell President 33 SELLERS: /s/ Lisa Orrell ------------------------------------------ Lisa Orrell Address: Orrell Communications, Inc. 700 Gale Drive, No. 100 Campbell, California 95008 Fax: 408-871-3593 34 EX-3.C 4 EXHIBIT (C)(III) Execution Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC., DEVRIES DATA SYSTEMS, INC. AND THE SELLERS IDENTIFIED HEREIN Dated as of November 10, 1999 ================================================================================
TABLE OF CONTENTS Page ARTICLE I THE TRANSACTIONS AND RELATED MATTERS..............................1 1.1 Purchase and Exchange........................................................1 1.2 Contribution.................................................................1 1.3 Stock Certificates...........................................................2 1.4 Stock Option and Other Plans.................................................2 1.5 Tax Consequences.............................................................3 1.6 Closing......................................................................3 1.7 Certificate of Incorporation of Top Team.....................................3 1.8 By-Laws of Top Team..........................................................3 1.9 Directors and Officers of Top Team...........................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY....................................................4 2.1 Authorization................................................................4 2.2 Ownership of Stock...........................................................4 2.3 Consents and Approvals.......................................................4 2.4 Securities Matters...........................................................4 2.5 Brokerage Fees...............................................................5 2.6 Disclosure .................................................................5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS........................6 3.1 Due Organization, Good Standing and Corporate Power..........................6 3.2 Authorization and Validity of Agreement......................................6 3.3 Capitalization...............................................................6 3.4 Consents and Approvals; No Violations........................................7 3.5 Company Reports and Financial Statements.....................................8 3.6 Absence of Certain Changes...................................................8 3.7 Minute Books.................................................................9 3.8 Title to Properties; Encumbrances............................................9 3.9 Compliance with Laws.........................................................9 3.10 Litigation .................................................................9 3.11 Employee Benefit Plans......................................................10 3.12 Employment Relations and Agreements.........................................12 3.13 Client Relations............................................................12 3.14 Taxes ................................................................12 3.15 Liabilities ................................................................13 3.16 Intellectual Properties.....................................................13 3.17 Material Contracts and Relationships........................................14
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3.18 Absence of Certain Business Practices.......................................16 3.19 Transactions with Related Parties...........................................16 3.20 Broker's or Finder's Fee....................................................16 3.21 Accounts Receivable.........................................................16 3.22 Inventories ................................................................17 3.23 Insurance ................................................................17 3.24 No Powers of Attorney or Suretyships........................................17 3.25 Banking Facilities..........................................................17 3.26 Environmental Liabilities...................................................18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM........................................................19 4.1 Due Organization; Good Standing and Corporate Power.........................19 4.2 Authorization and Validity of Agreement.....................................19 4.3 Consents and Approvals; No Violations.......................................20 4.4 EMKT Reports and Financial Statements.......................................20 4.5 Capitalization..............................................................20 4.6 Absence of Certain Changes..................................................21 4.7 Compliance with Laws........................................................21 4.8 Liabilities ................................................................21 4.9 Litigation ................................................................21 4.10 Tax Status ................................................................21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE...................................22 5.1 Access to Information Concerning Properties and Records.....................22 5.2 Conduct of the Business of the Company Pending the Closing Date.............22 5.3 Best Efforts................................................................23 5.4 No Solicitation of Other Offers.............................................23 5.5 EMKT Contribution to Top Team Capital.......................................24 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS............................24 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers.............................................24 6.2 Conditions Precedent to Obligations of EMKT and Top Team....................24 6.3 Conditions Precedent to Obligations of the Company and the Sellers..........25 6.4 Conditions to the Option Closing............................................26 ARTICLE VII TERMINATION AND ABANDONMENT.....................................26 7.1 Termination ................................................................26 7.2 Effect of Termination.......................................................27
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ARTICLE VIII INDEMNIFICATION....................................................27 8.1 Indemnification by Sellers.....................................................27 8.2 Indemnification by Sellers Jointly and Severally...............................28 8.3 Indemnification by EMKT and Top Team...........................................28 8.4 Indemnification by Sellers for Tax Liabilities.................................29 8.5 Claims for Indemnification.....................................................29 8.6 Defense Claims.................................................................29 8.7 Manner of Indemnification......................................................30 8.8 Limitations on Indemnification.................................................30 ARTICLE IX MISCELLANEOUS......................................................31 9.1 Fees and Expenses..............................................................31 9.2 Representations and Warranties.................................................31 9.3 Extension; Waiver..............................................................31 9.4 Public Announcements...........................................................31 9.5 Notices ...................................................................31 9.6 Entire Agreement...............................................................33 9.7 Binding Effect; Benefit; Assignment............................................33 9.8 Amendment and Modification.....................................................33 9.9 Further Actions................................................................33 9.10 Headings ...................................................................33 9.11 Counterparts...................................................................33 9.12 Applicable Law.................................................................33 9.13 Severability...................................................................33 9.14 "Person" Defined...............................................................34
iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT dated as of November 10, 1999 (this "AGREEMENT"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), DEVRIES DATA SYSTEMS, INC., a Delaware corporation (the "COMPANY"), and each of the other persons identified under the heading "Sellers" on the signature pages of this Agreement (together, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own of all of the issued and outstanding shares of capital stock of the Company, consisting of options to purchase common stock ("COMPANY COMMON STOCK") and preferred stock ("COMPANY PREFERRED STOCK") of the Company. The Company Common Stock and the Company Preferred Stock are referred to collectively as the "COMPANY STOCK." B. EMKT wishes to acquire from the Sellers an aggregate of 2,700,000 shares of Company Preferred Stock and from the Optionees referred to below an aggregate of 348,750 shares of Company Common Stock, constituting in the aggregate 45 percent of the number of outstanding shares of Company Stock (on a fully diluted basis), in exchange for an aggregate of 300,000 shares of EMKT Common Stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT, the Sellers and the Optionees will contribute all of their Company Common Stock and Company Preferred Stock to Top Team in exchange for an aggregate of 2,000,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM COMMON STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE AND EXCHANGE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell, and on the Option Closing Date (as defined in Section 1.6) the Sellers shall cause each of the Optionees to sell, to EMKT that number of shares of Company Common Stock or Company Preferred Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 45 percent of the number of outstanding shares of Company Stock (on a fully diluted and converted basis) (the "PURCHASE"), for a consideration equal to that number of EMKT shares set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1, (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 900,000 shares of Top Team Stock and (ii) each Seller shall contribute to Top Team all of his, her or its remaining Company Common Stock or Company Preferred Stock, constituting (with the Optionee's remaining Stock) in the aggregate the remaining 55 percent of the outstanding shares of Company Stock (on a fully diluted and converted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's or name on Schedule 1.1. On the Option Closing Date, each Optionee shall contribute to Top Team all of his, her or its remaining Stock. Such exchanges are referred to collectively herein as the "EXCHANGE." The Sellers or the Optionees will receive an aggregate of 1,100,000 shares of Top Team Stock. Such shares of Company Common Stock and Company Preferred Stock contributed to Top Team are referred to herein as the "CONTRIBUTED STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller shall deliver to EMKT, and on the Option Closing Date, each Optionee shall deliver to EMKT, certificates evidencing their respective shares of Contributed Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date and to each Optionee on the Option Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to the Option Closing Date, use its commercially reasonable best efforts to accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Common Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. On the Option Closing Date, the Company shall use its commercially reasonable best efforts to cause each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Common Stock that is outstanding and unexercised immediately prior to Option Closing Date to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Option Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "JOINDER AGREEMENT"). (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all commercially reasonable steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in Section 8.1), to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect 2 thereof. The Company will use its commercially reasonable best efforts to obtain all necessary consents to ensure that after the Option Closing Date, the only rights of the holders of Options to purchase shares of Company Common Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange Consideration, together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.5, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock from the Sellers and the exchange by the Sellers and EMKT of the Contributed Stock for the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Sections 6.1 - 6.3 are fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). The closing (the "OPTION CLOSING") of the purchase of the Company Stock from the Optionees and the exchange by the Optionees and EMKT of the Contributed Stock or the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California 90067 as soon as practicable after the last of the conditions set forth in Section 6.4 are fulfilled or waived (subject to applicable law), but in no event before January 3, 2000 or later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "OPTION CLOSING DATE"). 1.7 CERTIFICATE OF INCORPORATION OF TOP TEAM. The Certificate of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. 3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule 1.1, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team in connection with the Transactions. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been or prior to the Closing will have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not (except with respect to certain registration rights to be granted to the Sellers pursuant to the Registration Rights Agreement referred to in Section 6,3(e)) 4 be registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller is either (i) an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act, (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or (iii) has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions; such Seller is aware that the Merger Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without either (i) registration under the Securities Act and the California Law, and any other applicable securities laws, or (ii) an opinion of counsel reasonably satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. 5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS The Company and each of the Sellers hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each Subsidiary of the Company. (A "SUBSIDIARY" of a Person is a corporation, partnership, joint venture, limited liability company and other entity in which such Person owns all or a majority of the equity interest or is required to be consolidated on such Person's balance sheet pursuant to GAAP.) The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been or prior to the Closing will be duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the California General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 15,000,000 shares of common stock, par value $0.05 per share, constituting the Company Common Stock, and 15,000,000 shares of preferred stock, par value $0.001 per share, constituting the Company Preferred Stock. As of the date of this Agreement, (i) no shares of Company Common Stock are issued and outstanding, 6 (775,000 shares of Company Common Stock are reserved for issuance pursuant to outstanding Company Options granted under the Stock Incentive Plans, and (iii) 6,000,000 shares of Company Preferred Stock are issued and outstanding. All issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Company Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Common Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. (a) The execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Certificate of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) to the best knowledge of the Company and the Sellers violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to the Company or such Seller or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) to the best knowledge of the Company and the Sellers require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, 7 franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (b) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Certification of Incorporation or By-Laws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) to the best knowledge of the Company and the Sellers any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheets as of the end of the fiscal year ended December 31, 1998 and the nine-month period ended September 30, 1999 and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year ended December 31, 1998 and the period ended September 30, 1999 previously delivered to EMKT, were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended. 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since December 31, 1998 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 8 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the stockholders and Boards of Directors of the Company and its Subsidiaries since December 31, 1995. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. Except as disclosed in Schedule 3.8, the Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of December 31, 1998 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the Balance Sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 3.9 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending or, to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 9 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) RELATIONSHIP OF ACCRUED BENEFITS TO PENSION PLAN ASSETS. As of [Insert date last actuarial calculation was made], (1) the aggregate current value of all accrued benefits (based upon actuarial assumptions which have been furnished to and relied upon by EMKT, Top Team and Sub) under all Employee Benefit Plans which are subject to Title IV of ERISA and which are 10 Single Employer Plans (as defined in Section 4001(a)(15) of ERISA) did not exceed the aggregate current value of all assets of such Single Employer Plans allocable to such accrued benefits, and since [Insert date last actuarial calculation was made], there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, change in applicable law or otherwise, which individually or in the aggregate, would create any such excess; and (2) using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Company and its Subsidiaries to all such Employee Benefit Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each Multiemployer Plan ended prior to the date hereof, would not exceed $50,000. There has been no material change in the financial condition of any Multiemployer Plan or in any such actuarial assumption or computation method or in benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) all Employee Benefit Plans as in effect, together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 11 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Except as set forth on Schedule 3.12, to the best knowledge of the Company and the Sellers, each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or to the best knowledge of the Company and the Sellers threatened against or involving the Company or any of its Subsidiaries; (iv) to the best knowledge of the Company and the Sellers no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) to the best knowledge of the Company and the Sellers no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty during the last three years. There has not been, and to the best knowledge of the Company, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. Except as set forth on Schedule 3.13, there has not been, and to the best knowledge, information and belief of the Company and the Sellers, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries prior to the Closing Date. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries or reports due prior to the Closing Date have been fully paid or adequately disclosed. Tax liabilities for the period ending on the Closing Date have been adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. To the best knowledge of the Company and the Sellers, no issue has been raised during the past five years by any federal, state, local or foreign taxing authority that, if raised with 12 respect to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. The federal income tax liability of the Company and its Subsidiaries has been finally determined for all fiscal years to and including the fiscal year ended December 31, 1998. To the best knowledge of the Company and the Sellers, no examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Except as set forth on Schedule 3.15, neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in the Balance Sheet or referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. In the operation of its business the Company and its Subsidiaries have used, and currently use, domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information (collectively the "INTELLECTUAL PROPERTY"). Schedule 3.16 contains an accurate and complete list of all Intellectual Property (other than trade secrets and other confidential information) which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued 13 by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are indicated in Schedule 3.16 and such registrations, filings and issuances remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge, information and belief of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; 14 (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries. To the best knowledge of the Company and the Sellers, there are no material liabilities of any party to any Material Contract arising from any breach or default of any provision thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by any party thereto. (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) sets forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. 15 (e) To the best knowledge of the Company and the Sellers, the Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth on Schedule 3.18, neither the Company nor any of its Subsidiaries nor any employee, agent or other person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since January 1, 1994 and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since January 1, 1994. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions contemplated hereby. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 3.21, the accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $50,000) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to no defenses, rights of setoff, assignments, 16 restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The inventories reflected in the Balance Sheet were, and those reflected on the books of the Company since such date have been, determined and valued in accordance with generally accepted accounting principles applied on a consistent basis as reflected in the consolidated balance sheet, and existed on the respective dates. The inventories of the Company consist of items which are good and merchantable, and are of a quality and quantity presently usable or salable in the ordinary course of business. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies during the past five years (other than worker's compensation claims). The Company (together with its Subsidiaries) has to the best knowledge of the Company and the Sellers adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, the Company reasonably believes that such insurance is adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. To the best knowledge of the Company and the Sellers there are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company within the five years preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the knowledge of the Sellers and the Company, no such cancellation, amendment or increase of premiums is threatened. 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or 17 safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best of the Company's and the Sellers' knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. (b) To the best of the Company's and Sellers' knowledge (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the business or condition (financial or otherwise) of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries during the past five years and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its 18 Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. Except as set forth on Schedule 3.27, the Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the 19 consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms, except that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, and general equitable principles. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT or Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement, (i) 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, and options to purchase 2,200,000 shares of Top Team Stock have been reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans. Except as set forth on Schedule 4.5, in Section 5.5 and in this Section 4.5, there are not as of the date hereof, and as of the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to any other shares of capital stock of Top Team, pursuant to which Top Team is or may become obligated 20 to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of Top Team. Top Team and EMKT have entered into letters of intent or agreements to acquire five other companies in the interactive architecture business identified on Schedule 4.5 (together with the Transactions, the "ROLL-UP"). Schedule 4.5 sets forth the PRO FORMA capitalization of Top Team following the Roll-Up and the contribution by EMKT to the capital of Top Team of certain property, as described in Section 5.5. 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by the EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. 4.10 TAX STATUS. Neither EMKT nor Top Team has taken any action that would cause the Purchase not to qualify as an installment sale for federal income tax purposes or to cause the Exchange not to qualify as a tax-free contribution to capital under Section 351 of the Code. 21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford EMKT and Top Team, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its Subsidiaries; such investigation shall not, however, affect the representations and warranties made by the Company in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time request. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or Schedule 5.2 or otherwise consented to or approved in writing by EMKT (which consent shall not be unreasonably withheld, delayed or conditioned), during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business and will use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Certificate of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; 22 (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices, except that the Company may prepay its legal fees in connection with the Transactions to the extent they do not exceed the amount set forth in Section 9.1(a); (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective commercially reasonable best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team (which shall not be unreasonably withheld or delayed). 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, 23 representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. 5.5 EMKT CONTRIBUTION TO TOP TEAM CAPITAL. Simultaneously with the Closing, EMKT shall contribute $2,000,000 in cash to the capital of Top Team in exchange for (i) 250,000 shares of Top Team Stock, 250,000 shares of Top Team Preferred Stock, having the powers, preferences and rights set forth in Schedule 5.5, and (ii) rights, expiring on the six-month anniversary of the Closing Date, to purchase 3,600,000 shares of Top Team Stock at a purchase price of $7.50 per share. ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; 24 (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENT. Gregory de Vries shall have entered into an employment agreement with Top Team in form and substance reasonably satisfactory to Top Team; (d) LEGAL OPINION. EMKT and Top Team shall have received an opinion of Landels, Ripley & Diamond, counsel to the Company, in form and substance reasonably acceptable to EMKT and Top Team; (e) JOINDER AGREEMENTS. Each Optionee shall have executed a Joinder Agreement in form and substance reasonably satisfactory to EMKT; and (f) LEASES. The leases of real property between the Company and Gregory de Vries shall have been amended (i) to reduce the terms thereof to not greater than five years from the Closing Date, to allow for an annual base rental increase of three percent per annum and, with respect to the lease of the property at 267 Campbell Avenue, Campbell, California, to reduce the leased premises to the top floor thereof. (g) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS. The obligations of the Company and the Sellers to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) STOCK INCENTIVE PLAN. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up to 300,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; 25 (d) REGISTRATION RIGHTS. Top Team and Sellers shall have entered into an agreement regarding registration rights for the Purchase Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. EMKT and Sellers shall have entered into an agreement regarding registration rights for the Exchange Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof; (e) LEGAL OPINION. The Company and the Seller shall have received an opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to EMKT and Top Team, in form and substance reasonably acceptable to the Company and the Sellers; and (f) INDEMNITY AGREEMENT. Top Team and Gregory de Vries shall have entered into an indemnity agreement with respect to certain obligations of the Company personally guaranteed by Gregory de Vries. 6.4 CONDITIONS TO THE OPTION CLOSING. The respective obligations of EMKT and Top Team, on the one hand, and the Optionees, on the other hand, to affect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Option Closing Date of each of the following conditions: (a) CLOSING. The Closing shall have occurred; and (b) SECURITIES LAWS. The Purchase and Exchange with respect to the Optionee's Company Stock shall have been registered and qualified or exempt from registration and qualification under the Securities Act, the California Law and any applicable securities or "blue sky" law. EMKT, Top Team, the Company and the Sellers shall use their commercially reasonable best efforts to obtain such registration and qualification. The costs and expenses thereof shall be borne by EMKT and Top Team. ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within six months after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; 26 (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team, the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller, for a period of three years from the date hereof, shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the prime rate as reported from time to time by Bank of America NT & SA (the "PRIME RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Article II or III of this Agreement; (b) Any misrepresentation contained in any written statement or certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. 27 No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder relating back to the first dollar. 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of three years from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Subject to Section 8.4 hereof, any breach of any representation or warranty made by the Sellers or the Company in Article III of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any written statement or certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder relating back to the first dollar. 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of three years from the Closing Date, jointly and severally, indemnify and hold harmless each of Sellers in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or 28 (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT or Top Team for all claims hereunder relating back to the first dollar. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect, but not for losses due to any action or inaction taken or required to be taken by EMKT or Top Team hereunder. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the 29 indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of their respective Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire on the third anniversary hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such third anniversary and identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. 30 ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $20,000, and the Sellers will pay for the amount in excess thereof. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a wilful and material breach of the representations or warranties of EMKT or Top Team or a wilful failure of EMKT or Top Team to fulfill a material covenant or contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to $40,000 plus the actual costs of the Audit. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT, Top Team or Sub, may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be 31 in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: Devries Data Systems, Inc. 267 East Campbell Avenue, Suite 200 Campbell, California 95008 Attention: President Fax: 408-866-8136 with a copy to: Landels, Ripley & Diamond 350 The Embarcadero Hills Plaza San Francisco, California 94105-1250 Attention: Stanford Mattews, Esq. (b) if to any Seller to his, her or its address on the signature pages hereof (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 32 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 9.11 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory 33 policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers (if applicable) hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ ROBERT M. WALLACE ------------------------------------ Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ ROBERT M. WALLACE ----------------------------------- Robert M. Wallace, Chairman of the Board of Directors 34 THE COMPANY: DEVRIES DATA SYSTEMS, INC. By: /s/ GREGORY de VRIES ----------------------------------- Gregory de Vries President SELLERS: /s/ GREGORY de VRIES -------------------------------------- Gregory de Vries Address: 267 East Campbell Avenue, Suite 200 Campbell, California 95008 Fax: 408-866-8136 35 EX-4.C 5 EXHIBIT (C)(IV) Execution Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC., MUCCINO DESIGN GROUP, INC. AND THE SELLERS IDENTIFIED HEREIN Dated as of November 10, 1999 ================================================================================ 1
TABLE OF CONTENTS PAGE ARTICLE I THE TRANSACTIONS AND RELATED MATTERS.....................................................................1 1.1 Purchase and Exchange....................................................................................1 1.2 Contribution.............................................................................................1 1.3 Stock Certificates.......................................................................................2 1.4 Stock Option and Other Plans.............................................................................3 1.5 Tax Consequences.........................................................................................3 1.6 Closing ............................................................................................3 1.7 Certificate of Incorporation of Top Team.................................................................3 1.8 By-Laws of Top Team......................................................................................4 1.9 Directors and Officers of Top Team.......................................................................4 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY..................................................................................4 2.1 Authorization............................................................................................4 2.2 Ownership of Stock.......................................................................................4 2.3 Consents and Approvals...................................................................................4 2.4 Securities Matters.......................................................................................5 2.5 Brokerage Fees...........................................................................................5 2.6 Disclosure ............................................................................................6 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS..................................................................................................6 3.1 Due Organization, Good Standing and Corporate Power......................................................6 3.2 Authorization and Validity of Agreement..................................................................6 3.3 Capitalization...........................................................................................7 3.4 Consents and Approvals; No Violations....................................................................7 3.5 Company Reports and Financial Statements.................................................................8 3.6 Absence of Certain Changes...............................................................................8 3.7 Minute Books ............................................................................................9 3.8 Title to Properties; Encumbrances........................................................................9 3.9 Compliance with Laws.....................................................................................9 3.10 Litigation ............................................................................................9 3.11 Employee Benefit Plans..................................................................................10 3.12 Employment Relations and Agreements.....................................................................12 3.13 Client Relations........................................................................................12 3.14 Taxes ...........................................................................................12 3.15 Liabilities ...........................................................................................13 3.16 Intellectual Properties.................................................................................13
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3.17 Material Contracts and Relationships....................................................................14 3.18 Absence of Certain Business Practices...................................................................15 3.19 Transactions with Related Parties.......................................................................16 3.20 Broker's or Finder's Fee................................................................................16 3.21 Accounts Receivable.....................................................................................16 3.22 Inventories ...........................................................................................16 3.23 Insurance ...........................................................................................16 3.24 No Powers of Attorney or Suretyships....................................................................17 3.25 Banking Facilities......................................................................................17 3.26 Environmental Liabilities...............................................................................17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM....................................................................................19 4.1 Due Organization; Good Standing and Corporate Power.....................................................19 4.2 Authorization and Validity of Agreement.................................................................19 4.3 Consents and Approvals; No Violations...................................................................19 4.4 EMKT Reports and Financial Statements...................................................................20 4.5 Capitalization..........................................................................................20 4.6 Absence of Certain Changes..............................................................................20 4.7 Compliance with Laws....................................................................................20 4.8 Liabilities ...........................................................................................21 4.9 Litigation ...........................................................................................21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE...........................................................................21 5.1 Access to Information Concerning Properties and Records.................................................21 5.2 Conduct of the Business of the Company Pending the Closing Date.........................................21 5.3 Best Efforts ...........................................................................................22 5.4 No Solicitation of Other Offers.........................................................................23 5.5 EMKT Contribution to Top Team Capital...................................................................23 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS....................................................................23 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers.........................................................................23 6.2 Conditions Precedent to Obligations of EMKT and Top Team ...........................................................................................24 6.3 Conditions Precedent to Obligation of the Company and the Sellers.........................................................................................24 ARTICLE VII TERMINATION AND ABANDONMENT.............................................................................25 7.1 Termination ...........................................................................................25 7.2 Effect of Termination...................................................................................26
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ARTICLE VIII INDEMNIFICATION.........................................................................................26 8.1 Indemnification by Sellers..............................................................................26 8.2 Indemnification by Sellers Jointly and Severally........................................................27 8.3 Indemnification by EMKT and Top Team....................................................................27 8.4 Indemnification by Sellers for Tax Liabilities..........................................................28 8.5 Claims for Indemnification..............................................................................28 8.6 Defense Claims..........................................................................................28 8.7 Manner of Indemnification...............................................................................29 8.8 Limitations on Indemnification..........................................................................29 ARTICLE IX MISCELLANEOUS...........................................................................................30 9.1 Fees and Expenses.......................................................................................30 9.2 Representations and Warranties..........................................................................30 9.3 Extension; Waiver.......................................................................................30 9.4 Public Announcements....................................................................................30 9.5 Notices ...........................................................................................30 9.6 Entire Agreement........................................................................................32 9.7 Binding Effect; Benefit; Assignment.....................................................................32 9.8 Amendment and Modification..............................................................................32 9.9 Further Actions.........................................................................................32 9.10 Headings ...........................................................................................32 9.11 Counterparts ...........................................................................................32 9.12 Applicable Law..........................................................................................32 9.13 Severability ...........................................................................................32 9.14 "Person" Defined........................................................................................33
iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT, dated as of November 10, 1999 (this "Agreement"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), MUCCINO DESIGN GROUP, INC., a California corporation (the "COMPANY"), and each of the other persons identified under the heading "Sellers" on the signature pages of this Agreement (together, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own all of all of the issued and outstanding shares of common stock ("COMPANY STOCK") of the Company. B. EMKT wishes to acquire from the Sellers and the Optionees referred to below an aggregate of 3,613 shares of Company Stock in exchange for an aggregate of 100,000 shares of EMKT common stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT and the Sellers will contribute all of their Company Stock to Top Team in exchange for an aggregate of 800,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell, and shall cause each of the Optionees to sell, to EMKT that number of shares of Company Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 40 percent of the number of outstanding shares of Company Stock (on a fully diluted basis), for a consideration equal to that number of EMKT shares set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1 (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 320,000 shares of Top Team Stock and (ii) each Seller and Optionee shall contribute to Top Team all of his, her or its remaining Company Stock constituting in the aggregate the remaining 60 percent of the outstanding shares of Company Stock (on a fully diluted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1, for an aggregate of 480,000 shares of Top Team Stock. Such shares of Company Stock 1 contributed to Top Team are referred to herein as the "CONTRIBUTED STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller and Optionee shall deliver to EMKT certificates evidencing their respective shares of Company Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to Closing, accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. At the Closing, each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Stock that is outstanding and unexercised immediately prior to the Closing Date shall be deemed to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Article I and II of this Agreement. As required by Section 6.2(e) hereof, the Seller shall cause each Optionee to deliver prior to the Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "JOINDER AGREEMENT"). (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their affiliates, to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that after the Effective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Purchase Consideration and Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange Consideration , together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.6, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 2 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock (the "PURCHASE") and the exchange of the Contributed Stock for the Exchange Consideration (the "EXCHANGE") shall take place at the offices of Kaye, Scholer, Fierman, Hayes & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Article VI is fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). 1.7 CERTIFICATE OF INCORPORATION OF TOP TEAM. The Certificate of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM.. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule I, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any 3 liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not be registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller is (i) either an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act, (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or (iii) either alone or with his or her purchaser representative (within the meaning of Rule 501(h) of Regulation D under the Securities Act), has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions; such Seller is aware that the Merger Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and 4 (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without registration under the Securities Act and the California Law, and any other applicable securities laws, or without an opinion of counsel satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS The Company and each of the Sellers hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each corporation, partnership, joint venture, limited liability company and other entity in which the Company owns all or a majority of the equity interest or is required to be consolidated on the Company's balance sheet pursuant to GAAP ("SUBSIDIARIES"). The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 5 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the California General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 1,000,000 shares of common stock, constituting the Company. As of the date of this Agreement 9,032 shares of Company Stock are issued and outstanding. All issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date, there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Common Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Company Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any 6 capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Articles of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to such Seller or the Company or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (a) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Certification of Incorporation or By-Laws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheets as of the end of the fiscal year ended July 31, 1999 and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year ended July 31, 1999 previously delivered to EMKT, were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended. 7 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since July 31, 1999 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the stockholders and Boards of Directors of the Company and its Subsidiaries since December 31, 1995. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. The Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of December 31, 1998 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the balance sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 3.9 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries 8 taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending or, to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been 9 made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) RELATIONSHIP OF ACCRUED BENEFITS TO PENSION PLAN ASSETS. As of September 30, 1999 (1) the aggregate current value of all accrued benefits (based upon actuarial assumptions which have been furnished to and relied upon by EMKT and Top Team) under all Employee Benefit Plans which are subject to Title IV of ERISA and which are Single Employer Plans (as defined in Section 4001(a)(15) of ERISA) did not exceed the aggregate current value of all assets of such Single Employer Plans allocable to such accrued benefits, and since December 31, 1998 there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, change in applicable law or otherwise, which individually or in the aggregate, would create any such excess; and (2) using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Company and its Subsidiaries to all such Employee Benefit Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each Multiemployer Plan ended prior to the date hereof, would not exceed $50,000. There has been no material change in the financial condition of any Multiemployer Plan or in any such actuarial assumption or computation method or in benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) 10 all Employee Benefit Plans as in effect, together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or involving the Company or any of its Subsidiaries; (iv) no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty during the last three years. There has not been, and to the best knowledge of the Company and the Sellers, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. There has not been, and to the best knowledge, information and belief of the Company, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries have been fully paid or adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. No issue has been raised during the past five years by any federal, state, local or foreign taxing authority 11 that, if raised with respect to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. The federal income tax liability of the Company and its Subsidiaries has been finally determined for all fiscal years to and including the fiscal year ended December 31, 1998. No examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in the Balance Sheet or referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. In the operation of its business the Company and its Subsidiaries have used, and currently use, domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information (collectively the "INTELLECTUAL PROPERTY"). Schedule 3.16 contains an accurate and complete list of all Intellectual Property which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are 12 indicated in Schedule 3.16 and such registrations, filings and issuances remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge, information and belief of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; 13 (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries. There are no material liabilities of any party to any Material Contract arising from any breach or default of any provision thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by any party thereto. (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) and (d) set forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. (e) The Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor any of its Subsidiaries nor any employee, agent or other Person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or 14 agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since January 1, 1994 and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since January 1, 1994. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions contemplated hereby. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. The accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $ 25,000) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to no defenses, rights of setoff, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The inventories reflected in the Balance Sheet were, and those reflected on the books of the Company since such date have been, determined and valued in accordance with generally accepted accounting principles applied on a consistent basis as reflected in the Balance Sheet, and existed on the respective dates. The inventories of the Company consist of items 15 which are good and merchantable, and are of a quality and quantity presently usable or salable in the ordinary course of business. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies during the past five years (other than worker's compensation claims). The Company (together with its Subsidiaries) has adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, such insurance is adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. There are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company within the five years preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the best knowledge of the Sellers and the Company, no such cancellation, amendment or increase of premiums is threatened. 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 16 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best of the Company's and the Sellers' knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. (b) To the best knowledge of the Company and the Sellers (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries during the past five years and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in 17 connection with or in any way arising from or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. The Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of 18 EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) except for any required securities filings, require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT, Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement, (i) 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, and options to purchase 2,200,000 shares of Top Team Stock have been reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans. Except as set forth on Schedule 4.5, in Section 5.5 and in this Section 4.5, there are not as of the date hereof, and as of the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to any other shares of capital stock of Top Team, pursuant to which Top Team is or may become obligated to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of Top Team. Top Team and EMKT have entered into letters of intent or agreements to acquire five other companies in the interactive architecture business identified on Schedule 4.5 (together with the Transactions, the "ROLL-UP"). Schedule 4.5 sets forth the PRO FORMA capitalization of Top Team following the Roll-Up and the contribution by EMKT to the capital of Top Team of certain property, as described in Section 5.5. 19 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by the EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. 4.10 TAX STATUS. Neither EMKT nor Top Team has taken any action that would cause the Purchase not to qualify as an installment sale for federal income tax purposes or to cause the Exchange not to qualify as a tax-free contribution to capital under Section 351 of the Code. ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford EMKT and Top Team, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries in order that 20 they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its Subsidiaries; such investigation shall not, however, affect the representations and warranties made by the Company in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time request. The Sellers acknowledge that as of the date hereof the Audit has not been completed, and agree that if as a result of the Audit there should result in a material adverse change in the Condition of the Company from that shown in the financial statements delivered pursuant to Section 3.5, then the parties shall negotiate in good faith in order to increase or decrease the Consideration in order to equitably take into account such change of Condition. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by EMKT, during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business and will use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Articles of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices; (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or 21 terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team. 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly 22 communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. 5.5 EMKT CONTRIBUTION TO TOP TEAM CAPITAL. Simultaneously with the Closing, EMKT shall contribute $2,000,000 in cash to the capital of Top Team in exchange for (i) 250,000 shares of Top Team Stock, 250,000 shares of Top Team Preferred Stock, having the powers, preferences and rights set forth in Schedule 5.5, and (ii) rights, expiring on the six-month anniversary of the Closing Date, to purchase 3,600,000 shares of Top Team Stock at a purchase price of $7.50 per share. ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; 23 (c) EMPLOYMENT AGREEMENT. Alfredo Muccino shall have entered into an employment agreement with Top Team in form and substance satisfactory to Top Team; (d) LEGAL OPINION. EMKT and Top Team shall have received an opinion of Burriss & Monahan, counsel to the Company in form and substance acceptable to EMKT and Top Team; and (e) JOINDER AGREEMENTS. Each Optionee shall have executed a Joinder Agreement in form and substance satisfactory to EMKT. 24 (f) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY AND THE SELLERS. The obligation of the Company and the Sellers to effect the Transactions is also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) STOCK INCENTIVE PLANS. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up to 48,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; (d) EMPLOYMENT AGREEMENT. Alfredo Muccino shall have entered into an employment agreement with Top Team in form and substance satisfactory to him; (e) REGISTRATION RIGHTS. Top Team and Sellers shall have entered into an agreement regarding registration rights for the Purchase Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. EMKT and Sellers shall have entered into an agreement regarding registration rights for the Exchange Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof; and (f) LEGAL OPTION. The Company and the Sellers shall have received an opinion of Kaye, Scholer, Fierman, Hays and Handler, LLP, counsel to EMKT and Top Team, in form and substance acceptable to the Sellers. 25 ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within six months after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team, or the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the 26 prime rate as reported from time to time by Bank of America NT & SA (the "PRIME RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Articles II or III of this Agreement; (b) Any misrepresentation contained in any written statement or certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder relating back to the first dollar. 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of three years from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Any breach of any representation or warranty made by the Sellers or the Company in Article IV of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any written statement or certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. 27 No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder relating back to the first dollar. 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of three years from the Closing Date, jointly and severally, indemnify and hold harmless each of the Sellers in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT, Top Team for all claims hereunder relating back to the first dollar. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof or otherwise attributable to consummation of the Transactions, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 28 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of 29 its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of its Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 30 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire on the third anniversary hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such third anniversary and identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that the Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $20,000. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a wilful and material breach of the representations or warranties of EMKT, Top or Team or a wilful failure of EMKT or Top Team to fulfill a material covenant or contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to $40,000. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT or Top Team, may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 31 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: Mucccino Design Group, Inc. 448 South Market Street San Jose, California 9513 Attention: President Fax: 408-993-0864 (b) if to any Seller to its address on Schedule I (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 32 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 9.11 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 33 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers "hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors THE COMPANY: MUCCINO DESIGN GROUP, INC. By: /s/ Alfredo Muccino -------------------------------------- Alfredo Muccino President 34 SELLERS: ---------------------------------------- Alfredo Muccino Address: c/oMucccino Design Group, Inc. 448 South Market Street San Jose, California 9513 Fax: 408-993-0864 ---------------------------------------- Kim Catanzero Address: c/oMucccino Design Group, Inc. 448 South Market Street San Jose, California 9513 Fax: 408-993-0864 35 EX-5.C 6 EXHIBIT (C)(V) Execution Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC., IMAGE NETWORK, INC. AND THE SELLERS IDENTIFIED HEREIN Dated as of November 10, 1999 ================================================================================ TABLE OF CONTENTS PAGE ARTICLE I THE TRANSACTIONS AND RELATED MATTERS................1 1.1 Purchase and Exchange............................................1 1.2 Contribution.....................................................1 1.3 Stock Certificates...............................................2 1.4 Stock Option and Other Plans.....................................3 1.5 Tax Consequences.................................................3 1.6 Closing ....................................................3 1.7 Certificate of Incorporation of Top Team.........................3 1.8 By-Laws of Top Team..............................................4 1.9 Directors and Officers of Top Team...............................4 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY.............................4 2.1 Authorization....................................................4 2.2 Ownership of Stock...............................................4 2.3 Consents and Approvals...........................................4 2.4 Securities Matters...............................................5 2.5 Brokerage Fees...................................................5 2.6 Disclosure ....................................................6 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS.............................................6 3.1 Due Organization, Good Standing and Corporate Power..............6 3.2 Authorization and Validity of Agreement..........................6 3.3 Capitalization...................................................7 3.4 Consents and Approvals; No Violations............................7 3.5 Company Reports and Financial Statements.........................8 3.6 Absence of Certain Changes.......................................8 3.7 Minute Books ....................................................9 3.8 Title to Properties; Encumbrances................................9 3.9 Compliance with Laws.............................................9 3.10 Litigation ....................................................9 3.11 Employee Benefit Plans..........................................10 3.12 Employment Relations and Agreements.............................12 3.13 Client Relations................................................12 3.14 Taxes ...................................................12 3.15 Liabilities ...................................................13 3.16 Intellectual Properties.........................................13 i 3.17 Material Contracts and Relationships............................14 3.18 Absence of Certain Business Practices...........................15 3.19 Transactions with Related Parties...............................16 3.20 Broker's or Finder's Fee........................................16 3.21 Accounts Receivable.............................................16 3.22 Inventories ...................................................16 3.23 Insurance ...................................................16 3.24 No Powers of Attorney or Suretyships............................17 3.25 Banking Facilities..............................................17 3.26 Environmental Liabilities.......................................17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM...............................19 4.1 Due Organization; Good Standing and Corporate Power.............19 4.2 Authorization and Validity of Agreement.........................19 4.3 Consents and Approvals; No Violations...........................19 4.4 EMKT Reports and Financial Statements...........................20 4.5 Capitalization..................................................20 4.6 Absence of Certain Changes......................................20 4.7 Compliance with Laws............................................20 4.8 Liabilities.....................................................21 4.9 Litigation......................................................21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE......................21 5.1 Access to Information Concerning Properties and Records.........21 5.2 Conduct of the Business of the Company Pending the Closing Date.21 5.3 Best Efforts ...................................................22 5.4 No Solicitation of Other Offers.................................23 5.5 EMKT Contribution to Top Team Capital...........................23 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS...............23 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers.................................23 6.2 Conditions Precedent to Obligations of EMKT and Top Team ...................................................24 6.3 Conditions Precedent to Obligation of the Company and the Sellers.................................................24 ARTICLE VII TERMINATION AND ABANDONMENT........................25 7.1 Termination ...................................................25 7.2 Effect of Termination...........................................26 ii ARTICLE VIII INDEMNIFICATION....................................26 8.1 Indemnification by Sellers......................................26 8.2 Indemnification by Sellers Jointly and Severally................27 8.3 Indemnification by EMKT and Top Team............................27 8.4 Indemnification by Sellers for Tax Liabilities..................28 8.5 Claims for Indemnification......................................28 8.6 Defense Claims..................................................28 8.7 Manner of Indemnification.......................................29 8.8 Limitations on Indemnification..................................29 ARTICLE IX MISCELLANEOUS......................................30 9.1 Fees and Expenses...............................................30 9.2 Representations and Warranties..................................30 9.3 Extension; Waiver...............................................30 9.4 Public Announcements............................................30 9.5 Notices.........................................................30 9.6 Entire Agreement................................................32 9.7 Binding Effect; Benefit; Assignment.............................32 9.8 Amendment and Modification......................................32 9.9 Further Actions.................................................32 9.10 Headings........................................................32 9.11 Counterparts ...................................................32 9.12 Applicable Law..................................................32 9.13 Severability ...................................................32 9.14 "Person" Defined................................................33 iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT, dated as of November 10, 1999 (this "Agreement"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), IMAGE NETWORK, INC., a California corporation (the "COMPANY"), and each of the other persons identified under the heading "Sellers" on the signature pages of this Agreement (together, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own all of all of the issued and outstanding shares of common stock ("COMPANY STOCK") of the Company. B. EMKT wishes to acquire from the Sellers and the Optionees referred to below an aggregate of 40 shares of Company Stock in exchange for an aggregate of 100,000 shares of EMKT common stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT and the Sellers will contribute all of their Company Stock to Top Team in exchange for an aggregate of 700,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell, and shall cause each of the Optionees to sell, to EMKT that number of shares of Company Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 40 percent of the number of outstanding shares of Company Stock (on a fully diluted basis), for a consideration equal to that number of EMKT shares set forth opposite such Seller's or Optionee's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1 (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 280,000 shares of Top Team Stock and (ii) each Seller and Optionee shall contribute to Top Team all of his, her or its remaining Company Stock constituting in the aggregate the remaining 60 percent of the outstanding shares of Company Stock (on a fully diluted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's or Optionee's name on Schedule 1.1, for an aggregate of 420,000 shares of Top Team Stock. Such shares of Company Stock contributed to Top Team are referred to herein as the "CONTRIBUTED 1 STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller and Optionee shall deliver to EMKT certificates evidencing their respective shares of Company Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to Closing, accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. At the Closing, each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Stock that is outstanding and unexercised immediately prior to the Closing Date shall be deemed to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Article I and II of this Agreement. As required by Section 6.2(e) hereof, the Seller shall cause each Optionee to deliver prior to the Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "JOINDER AGREEMENT"). (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their affiliates, to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect thereof. The Company will use its best efforts to obtain all necessary consents to ensure that after the Effective Time, the only rights of the holders of Options to purchase shares of Common Stock in respect of such Options will be to receive the Purchase Consideration and Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange Consideration , together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.6, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 2 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock (the "PURCHASE") and the exchange of the Contributed Stock for the Exchange Consideration (the "EXCHANGE") shall take place at the offices of Kaye, Scholer, Fierman, Hayes & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Article VI is fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). 1.7 CERTIFICATE OF INCORPORATION OF TOP TEAM. The Certificate of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM.. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule I, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior 3 assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not be registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller is (i) either an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act, (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or (iii) either alone or with his or her purchaser representative (within the meaning of Rule 501(h) of Regulation D under the Securities Act), has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions; such Seller is aware that the Merger Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and 4 (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without registration under the Securities Act and the California Law, and any other applicable securities laws, or without an opinion of counsel satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS The Company and each of the Sellers hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each corporation, partnership, joint venture, limited liability company and other entity in which the Company owns all or a majority of the equity interest or is required to be consolidated on the Company's balance sheet pursuant to GAAP ("SUBSIDIARIES"). The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 5 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the California General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 100,000 shares of common stock, constituting the Company. As of the date of this Agreement 100 shares of Company Stock are issued and outstanding. All issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date, there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Common Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Company Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or 6 indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Articles of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to such Seller or the Company or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (a) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Certification of Incorporation or By-Laws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheets as of the end of the fiscal year ended July 31, 1999 and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year ended July 31, 1999 previously delivered to EMKT, were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended. 7 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since July 31, 1999 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the stockholders and Boards of Directors of the Company and its Subsidiaries since December 31, 1995. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. The Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of December 31, 1998 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the balance sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 3.9 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or 8 investigations pending or, to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee 9 Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) RELATIONSHIP OF ACCRUED BENEFITS TO PENSION PLAN ASSETS. As of September 30, 1999 (1) the aggregate current value of all accrued benefits (based upon actuarial assumptions which have been furnished to and relied upon by EMKT and Top Team) under all Employee Benefit Plans which are subject to Title IV of ERISA and which are Single Employer Plans (as defined in Section 4001(a)(15) of ERISA) did not exceed the aggregate current value of all assets of such Single Employer Plans allocable to such accrued benefits, and since December 31, 1998 there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, change in applicable law or otherwise, which individually or in the aggregate, would create any such excess; and (2) using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Company and its Subsidiaries to all such Employee Benefit Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each Multiemployer Plan ended prior to the date hereof, would not exceed $50,000. There has been no material change in the financial condition of any Multiemployer Plan or in any such actuarial assumption or computation method or in benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) all Employee Benefit Plans as in effect, 10 together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or threatened against or involving the Company or any of its Subsidiaries; (iv) no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty during the last three years. There has not been, and to the best knowledge of the Company and the Sellers, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. There has not been, and to the best knowledge, information and belief of the Company, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries have been fully paid or adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. No issue has been raised during the past five years by any federal, state, local or foreign taxing authority that, if raised with respect 11 to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. The federal income tax liability of the Company and its Subsidiaries has been finally determined for all fiscal years to and including the fiscal year ended December 31, 1998. No examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in the Balance Sheet or referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. In the operation of its business the Company and its Subsidiaries have used, and currently use, domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information (collectively the "INTELLECTUAL PROPERTY"). Schedule 3.16 contains an accurate and complete list of all Intellectual Property which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are indicated in Schedule 3.16 and such registrations, filings and issuances 12 remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge, information and belief of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; 13 (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries. There are no material liabilities of any party to any Material Contract arising from any breach or default of any provision thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by any party thereto. (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) and (d) set forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. (e) The Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company nor any of its Subsidiaries nor any employee, agent or other Person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or 14 agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since January 1, 1994 and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since January 1, 1994. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions contemplated hereby. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. The accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $ 25,000) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to no defenses, rights of setoff, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The inventories reflected in the Balance Sheet were, and those reflected on the books of the Company since such date have been, determined and valued in accordance with generally accepted accounting principles applied on a consistent basis as reflected in the Balance Sheet, and existed on the respective dates. The inventories of the Company consist of items 15 which are good and merchantable, and are of a quality and quantity presently usable or salable in the ordinary course of business. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies during the past five years (other than worker's compensation claims). The Company (together with its Subsidiaries) has adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, such insurance is adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. There are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company within the five years preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the best knowledge of the Sellers and the Company, no such cancellation, amendment or increase of premiums is threatened. 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 16 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best of the Company's and the Sellers' knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. (b) To the best knowledge of the Company and the Sellers (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries during the past five years and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in connection with or in any way arising from 17 or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. The Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of 18 EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) except for any required securities filings, require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT, Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement, (i) 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, and options to purchase 2,200,000 shares of Top Team Stock have been reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans. Except as set forth on Schedule 4.5, in Section 5.5 and in this Section 4.5, there are not as of the date hereof, and as of the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to any other shares of capital stock of Top Team, pursuant to which Top Team is or may become obligated to issue shares of capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of Top Team. Top Team and EMKT have entered into letters of intent or agreements to acquire five other companies in the interactive architecture business identified on Schedule 4.5 (together with the Transactions, the "ROLL-UP"). Schedule 4.5 sets forth the PRO FORMA capitalization of Top Team following the Roll-Up and the contribution by EMKT to the capital of Top Team of certain property, as described in Section 5.5. 19 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by the EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. 4.10 TAX STATUS. Neither EMKT nor Top Team has taken any action that would cause the Purchase not to qualify as an installment sale for federal income tax purposes or to cause the Exchange not to qualify as a tax-free contribution to capital under Section 351 of the Code. ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford EMKT and Top Team, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its Subsidiaries; such investigation 20 shall not, however, affect the representations and warranties made by the Company in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time request. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or otherwise consented to or approved in writing by EMKT, during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business and will use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Articles of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices; (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; 21 (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team. 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. 5.5 EMKT CONTRIBUTION TO TOP TEAM CAPITAL. Simultaneously with the Closing, EMKT shall contribute $2,000,000 in cash to the capital of Top Team in exchange for (i) 250,000 shares of Top Team Stock, 250,000 shares of 22 Top Team Preferred Stock, having the powers, preferences and rights set forth in Schedule 5.5, and (ii) rights, expiring on the six-month anniversary of the Closing Date, to purchase 3,600,000 shares of Top Team Stock at a purchase price of $7.50 per share. ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENT. Scott Gardner shall have entered into an employment agreement with Top Team in form and substance satisfactory to Top Team; (d) LEGAL OPINION. EMKT and Top Team shall have received an opinion of Burriss & Monahan, counsel to the Company in form and substance acceptable to EMKT and Top Team; and 23 (e) JOINDER AGREEMENTS. Each Optionee shall have executed a Joinder Agreement in form and substance satisfactory to EMKT. (f) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY AND THE SELLERS. The obligation of the Company and the Sellers to effect the Transactions is also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) STOCK INCENTIVE PLANS. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up to 42,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; (d) EMPLOYMENT AGREEMENT. Scott Gardner shall have entered into an employment agreement with Top Team in form and substance satisfactory to him; (e) REGISTRATION RIGHTS. Top Team and Sellers shall have entered into an agreement regarding registration rights for the Purchase Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. EMKT and Sellers shall have entered into an agreement regarding registration rights for the Exchange Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof; and (f) LEGAL OPTION. The Company and the Sellers shall have received an opinion of Kaye, Scholer, Fierman, Hays and Handler, LLP, counsel to EMKT and Top Team, in form and substance acceptable to the Sellers. 24 ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within six months after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team, or the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by 25 EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the prime rate as reported from time to time by Bank of America NT & SA (the "PRIME RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Articles II or III of this Agreement; (b) Any misrepresentation contained in any written statement or certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder relating back to the first dollar. 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of three years from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Any breach of any representation or warranty made by the Sellers or the Company in Article IV of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any written statement or certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder relating back to the first dollar. 26 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of three years from the Closing Date, jointly and severally, indemnify and hold harmless each of the Sellers in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT, Top Team for all claims hereunder relating back to the first dollar. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof or otherwise attributable to consummation of the Transactions, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of 27 its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the 28 defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of its Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire on the third anniversary hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such third anniversary and identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that the Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $20,000. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a wilful and material breach of the representations or warranties of EMKT, Top or Team or a wilful failure of EMKT or Top Team to fulfill a material covenant or contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to $40,000. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT or Top Team, may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 29 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: Image Network, Inc. 448 South Market Street San Jose, California 9513 Attention: President Fax: 408-993-1059 (b) if to any Seller to its address on Schedule I (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 30 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 9.11 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 31 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "PERSON" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers "hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ ROBERT M. WALLACE ------------------------------------------ Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ ROBERT M. WALLACE ------------------------------------------ Robert M. Wallace, Chairman of the Board of Directors THE COMPANY: IMAGE NETWORK, INC. By: /s/ SCOTT GARDNER ------------------------------------------ Scott Gardner President 32 SELLERS: /s. SCOTT GARDNER ---------------------------------------------- Scott Gardner Address: c/o Mucccino Design Group, Inc. 448 South Market Street San Jose, California 95113 Fax: 408-993-0864 33 EX-6.C 7 EXHIBIT (C)(VI) Executive Copy ================================================================================ STOCK PURCHASE AND CONTRIBUTION AGREEMENT BY AND AMONG EMARKETPLACE, INC., TOP TEAM, INC., ONCOURSE NETWORK, INC. AND KENT RHODES Dated as of November 19, 1999 ================================================================================ TABLE OF CONTENTS Page ARTICLE I THE TRANSACTIONS AND RELATED MATTERS....................1 1.1 Purchase and Exchange...............................................1 1.2 Contribution........................................................1 1.3 Stock Certificates..................................................2 1.4 Stock Option and Other Plans........................................2 1.5 Tax Consequences....................................................2 1.6 Closing ........................................................3 1.7 Certificate of Incorporation of Top Team............................3 1.8 By-Laws of Top Team.................................................3 1.9 Directors and Officers of Top Team..................................3 ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY...................................3 2.1 Authorization.......................................................3 2.2 Ownership of Stock..................................................3 2.3 Consents and Approvals..............................................4 2.4 Securities Matters..................................................4 2.5 Brokerage Fees......................................................5 2.6 Disclosure ........................................................5 ARTICLE III JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS..........................5 3.1 Due Organization, Good Standing and Corporate Power.................5 3.2 Authorization and Validity of Agreement.............................6 3.3 Capitalization......................................................6 3.4 Consents and Approvals; No Violations...............................7 3.5 Company Reports and Financial Statements............................8 3.6 Absence of Certain Changes..........................................8 3.7 Minute Books........................................................8 3.8 Title to Properties; Encumbrances...................................8 3.9 Compliance with Laws................................................9 3.10 Litigation ........................................................9 3.11 Employee Benefit Plans..............................................9 3.12 Employment Relations and Agreements................................11 3.13 Client Relations...................................................11 3.14 Taxes .......................................................12 3.15 Liabilities .......................................................12 3.16 Intellectual Properties............................................13 3.17 Material Contracts and Relationships...............................13 i 3.18 Absence of Certain Business Practices..............................15 3.19 Transactions with Related Parties..................................15 3.20 Broker's or Finder's Fee...........................................16 3.21 Accounts Receivable................................................16 3.22 Inventories .......................................................16 3.23 Insurance .......................................................16 3.24 No Powers of Attorney or Suretyships...............................17 3.25 Banking Facilities.................................................17 3.26 Environmental Liabilities..........................................17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM..........................................19 4.1 Due Organization; Good Standing and Corporate Power................19 4.2 Authorization and Validity of Agreement............................19 4.3 Consents and Approvals; No Violations..............................19 4.4 EMKT Reports and Financial Statements..............................20 4.5 Capitalization.....................................................20 4.6 Absence of Certain Changes.........................................20 4.7 Compliance with Laws...............................................20 4.8 Liabilities .......................................................20 4.9 Litigation .......................................................20 4.10 Tax Status .......................................................21 ARTICLE V ACTIONS PRIOR TO CLOSING DATE..........................21 5.1 Access to Information Concerning Properties and Records............21 5.2 Conduct of the Business of the Company Pending the Closing Date....21 5.3 Best Efforts.......................................................22 5.4 No Solicitation of Other Offers....................................23 ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS...................23 6.1 Conditions Precedent to Obligations of EMKT, Top Team and the Company and the Sellers...........................23 6.2 Conditions Precedent to Obligations of EMKT and Top Team...........23 6.3 Conditions Precedent to Obligations of the Company and the Sellers.24 ARTICLE VII TERMINATION AND ABANDONMENT............................25 7.1 Termination .......................................................25 7.2 Effect of Termination..............................................25 ARTICLE VIII INDEMNIFICATION........................................25 8.1 Indemnification by Sellers.........................................25 8.2 Indemnification by Sellers Jointly and Severally...................26 8.3 Indemnification by EMKT and Top Team...............................27 ii 8.4 Indemnification by Sellers for Tax Liabilities.....................27 8.5 Claims for Indemnification.........................................28 8.6 Defense Claims.....................................................28 8.7 Manner of Indemnification..........................................29 8.8 Limitations on Indemnification.....................................29 ARTICLE IX MISCELLANEOUS..........................................29 9.1 Fees and Expenses..................................................29 9.2 Representations and Warranties.....................................29 9.3 Extension; Waiver..................................................29 9.4 Public Announcements...............................................30 9.5 Notices .......................................................30 9.6 Entire Agreement...................................................31 9.7 Binding Effect; Benefit; Assignment................................31 9.8 Amendment and Modification.........................................31 9.9 Further Actions....................................................31 9.10 Headings .......................................................31 9.11 Counterparts.......................................................32 9.12 Applicable Law.....................................................32 9.13 Severability.......................................................32 9.14 "Person" Defined...................................................32 iii STOCK PURCHASE AND CONTRIBUTION AGREEMENT This STOCK PURCHASE AND CONTRIBUTION AGREEMENT dated as of November 19, 1999 (this "AGREEMENT"), is by and among EMARKETPLACE INC., a Delaware corporation ("EMKT"), TOP TEAM, INC. a Delaware corporation ("TOP TEAM"), ONCOURSE NETWORK, INC., a Delaware corporation (the "COMPANY"), KENT RHODES (together with the other Persons executing a Joinder Agreement as described herein, the "SELLERS"), and is made with reference to the following facts: A. The Sellers own of all of the issued and outstanding shares of capital stock of the Company, consisting of common stock ("COMPANY STOCK") of the Company. B. EMKT wishes to acquire from the Sellers an aggregate of 238,000 shares of Company Stock, constituting in the aggregate 50 percent of the number of outstanding shares of Company Stock (on a fully diluted basis), in exchange for an aggregate of 38,000 shares of EMKT Common Stock, par value $0.001 per share ("EMKT STOCK"). Immediately after such exchange, EMKT and the Sellers will contribute all of their Company Stock to Top Team in exchange for an aggregate of 220,000 shares of common stock, par value $0.001 per share, of Top Team ("TOP TEAM COMMON STOCK"). NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements herein contained, the parties hereto agree as follows: ARTICLE I THE TRANSACTIONS AND RELATED MATTERS 1.1 PURCHASE AND EXCHANGE. On the Closing Date (as defined in Section 1.6), each of the Sellers shall sell to EMKT that number of shares of Company Common Stock set forth opposite such Seller's name on Schedule 1.1 (the "PURCHASED COMPANY STOCK"), constituting in the aggregate 50 percent of the number of outstanding shares of Company Stock (on a fully diluted and converted basis) (the "PURCHASE"), for a consideration equal to that number of EMKT shares set forth opposite such Seller's name on Schedule 1.1 (the "PURCHASE CONSIDERATION"). The Purchase Consideration shall be payable on the later of the Closing Date and January 3, 2000. 1.2 CONTRIBUTION. On the Closing Date, immediately after the purchase of the Purchased Company Stock as contemplated by Section 1.1, (i) EMKT shall contribute the Purchased Company Stock to Top Team in exchange for 110,000 shares of Top Team Stock and (ii) each Seller shall contribute to Top Team all of his, her or its remaining Company Stock, constituting in the aggregate the remaining 50 percent of the outstanding shares of Company Stock (on a fully diluted and converted basis) in exchange for that number of shares of Top Team Stock set forth opposite such Seller's name on Schedule 1.1. The Sellers will receive an aggregate of 110,000 shares of Top Team Stock. Such exchanges are 1 referred to collectively herein as the "EXCHANGE." Such shares of Company Stock contributed to Top Team are referred to herein as the "CONTRIBUTED STOCK." Such shares of Top Team Stock received by the Sellers and EMKT in exchange for the Contributed Stock are referred to herein as the "EXCHANGE CONSIDERATION." 1.3 STOCK CERTIFICATES. On the Closing Date, each Seller shall deliver to EMKT certificates evidencing their respective shares of Contributed Stock, which shall be Duly Endorsed. The term "DULY ENDORSED" means duly endorsed by the person or persons in whose name a stock certificate is registered in blank or accompanied by a duly executed stock assignment separate from such certificate. Top Team will deliver to each Seller and EMKT on the Closing Date duly issued and authenticated certificates evidencing the Exchange Consideration issuable to such person pursuant to Section 1.2. 1.4 STOCK OPTION AND OTHER PLANS. (a) The Company shall, prior to the Closing Date, use its commercially reasonable best efforts to accelerate the vesting or exercisability of all outstanding employee stock options to purchase Company Common Stock, whether set forth in any stock option plan or plans of the Company ("COMPANY STOCK OPTION PLANS"), in an option agreement with the optionee or otherwise. On the Closing Date, the Company shall use its commercially reasonable best efforts to cause each such option (each, a "COMPANY OPTION") granted by the Company to purchase shares of Company Common Stock that is outstanding and unexercised immediately prior to Closing Date to be exercised, and the optionees thereunder (the "OPTIONEES") shall be deemed to be Sellers for purposes of Articles I and II of this Agreement. As required by Section 6.2(e) hereof, the Sellers shall cause each Optionee to deliver prior to the Option Closing a joinder agreement whereby each such Optionee agrees to be bound by the provisions of Articles I and II of this Agreement as if he or she were a Seller hereunder (each, a "JOINDER AGREEMENT"). (b) Any then outstanding stock appreciation rights or limited stock appreciation rights shall be canceled as of immediately prior to the Closing without any payment therefor. As provided herein, the Company Stock Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any Subsidiary (collectively with the Company Stock Option Plans, the "COMPANY STOCK INCENTIVE PLANS") shall terminate as of the Closing Date. The Company will take all commercially reasonable steps to ensure that neither the Company nor any of its Subsidiaries is or will be bound by any Company Options, other options, warrants, rights or agreements which would entitle any Person, other than EMKT, Top Team or either of their Affiliated Parties (as defined in Section 8.1), to own any capital stock of the Company or any of its Subsidiaries or to receive any payment in respect thereof. The Company will use its commercially reasonable best efforts to obtain all necessary consents to ensure that after the Closing Date, the only rights of the holders of Options to purchase shares of Company Common Stock in respect of such Options will be to receive the Purchase Consideration and the Exchange Consideration in cancellation and settlement thereof. 1.5 TAX CONSEQUENCES. It is intended by the parties that the contribution to Top Team of the Contributed Stock in exchange for the Exchange 2 Consideration, together with (i) the contributions to be made in connection with the Roll-Up (as defined in Section 4.5) and (ii) the capital contribution of EMKT to Top Team referred to in Section 5.5, shall constitute a contribution of capital under Section 351 of the Internal Revenue Code of 1986 (the "CODE"). 1.6 CLOSING. The closing (the "CLOSING") of the purchase of the Purchased Company Stock from the Sellers and the exchange by the Sellers and EMKT of the Contributed Stock for the Exchange Consideration shall take place at the offices of Kaye, Scholer, Fierman, Hays & Handler, LLP, 1999 Avenue of the Stars, 16th Floor, Los Angeles, California, as soon as practicable after the last of the conditions set forth in Article VI are fulfilled or waived (subject to applicable law) but in no event later than the fifth business day thereafter, or at such other time and place and on such other date as EMKT, Top Team and the Company shall mutually agree (the "CLOSING DATE"). 1.7 CERTIFICATE OF INCORPORATION OF TOP TEAM. The Certificate of Incorporation of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.7. 1.8 BY-LAWS OF TOP TEAM. The By-Laws of Top Team, as in effect as of the Closing Date, shall be as set forth in Schedule 1.8. 1.9 DIRECTORS AND OFFICERS OF TOP TEAM. As of the Closing Date, the directors of Top Team shall be Robert Wallace, Fred Walti, Brian Burns and such additional directors as shall be designated by Top Team, each to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of Top Team, until the next annual stockholders' meeting of Top Team and until their respective successors shall be duly elected or appointed and qualified, and the persons set forth on Schedule 1.9 shall hold the offices of Top Team therein indicated until their respective successors shall be duly elected or appointed and qualified. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS INDIVIDUALLY Each Seller, severally and not jointly, hereby represents and warrants to EMKT and Top Team that: 2.1 AUTHORIZATION. Such Seller has full power and authority to enter into this Agreement and to perform his, her or its obligations under this Agreement and to consummate the Purchase, the Exchange and the other transactions contemplated hereby (collectively, the "TRANSACTIONS"). This Agreement and all agreements or instruments herein contemplated to be executed by such Seller are the valid and binding agreements of such Seller, enforceable against such Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights generally and to general principles of equity. 2.2 OWNERSHIP OF STOCK. Such Seller is the record owner of all of the Company Stock set forth below such Seller's name on Schedule 1.1, free and clear 3 of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever. Upon consummation of the Exchange, Top Team shall be the owner, beneficially and of record, of all of the outstanding shares of capital stock of the Company, free and clear of any liens, encumbrances, pledges, security interests, restrictions, prior assignments and claims of any kind or nature whatsoever, except as otherwise created by EMKT or Top Team in connection with the Transactions. 2.3 CONSENTS AND APPROVALS. Neither the execution and delivery of this Agreement by such Seller nor the consummation of the Purchase and Exchange by such Seller will violate, result in a breach of any of the terms or provisions of, constitute a default (or any event that, with the giving of notice or the passage of time or both, would constitute a default) under, result in the acceleration of an indebtedness under or result in any right of termination of, increase any amounts payable under, or conflict with, the trust agreements, if any, relating to such Seller or any other agreement, indenture or other instrument to which such Seller is a party or by which any of its properties are bound, or any judgment, decree, order or award of any court, governmental body or arbitrator (domestic or foreign) applicable to such Seller. All consents, approvals and authorizations of, and declarations, filings and registrations with, and payments of all taxes, fees, fines, and penalties to, any governmental or regulatory authority (domestic or foreign) or any other Person (either governmental or private) required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the Transactions by such Seller have been or prior to the Closing will have been obtained, made and satisfied. 2.4 SECURITIES MATTERS. Such Seller acknowledges that the shares of EMKT Stock that constitute the Purchase Consideration and the shares of Top Team Stock that constitute the Exchange Consideration have not been and will not (except with respect to certain registration rights to be granted to the Sellers pursuant to the Registration Rights Agreement referred to in Section 6,3(e)) be registered under (i) the Securities Act of 1933, as amended (the "SECURITIES ACT") inasmuch as they are being issued pursuant to an exemption from registration granted under Section 4(2) of the Securities Act and Regulation D promulgated thereunder relating to transactions not involving any public offering, (ii) the California Corporate Securities Laws of 1968 (the "CALIFORNIA LAW") or (iii) any other applicable securities laws, and that EMKT and Top Team's reliance on such exemption or related exemptions is predicated in part on the following representations and agreements made to EMKT and Top Team by such Seller: (a) Such Seller is acquiring the Purchase Consideration and the Exchange Consideration (together, the "CONSIDERATION") to be issued to such Seller hereunder for investment for his or her own account and not with a view to or for sale in connection with any distribution and resale thereof, with no intention of distributing or reselling the same; and such Seller is not aware of any particular occasion, event or circumstance upon the occurrence or happening of which he or it intends to dispose of such shares; (b) Such Seller is either (i) an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act, (ii) a "qualified purchaser" within the meaning of Section 25102(n)(2) of the California Law or 4 (iii) has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the Transactions; such Seller is aware that the Merger Consideration constitutes "restricted," "letter" or "investment" securities and such Seller by reason of his business or financial experience has the capacity to protect his own interest in connection with the Transactions; and (c) Such Seller agrees not to sell, transfer, assign, pledge, hypothecate or otherwise dispose of his or its shares received in this transaction without either (i) registration under the Securities Act and the California Law, and any other applicable securities laws, or (ii) an opinion of counsel reasonably satisfactory to EMKT and Top Team that the transaction by which such shares are proposed to be disposed of is exempt from the Securities Act, the California Law and any other applicable securities laws, and acknowledges that EMKT and Top Team will place a legend on the certificates representing such shares substantially to such effect concerning these restrictions. 2.5 BROKERAGE FEES. No Person is entitled to any brokerage or finder's fee or other commission from such Seller in respect of this Agreement or the Transactions. 2.6 DISCLOSURE. The information provided by such Seller in this Agreement and in any other writing furnished pursuant hereto does not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances under which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available by such Seller to EMKT or Top Team pursuant hereto were or will be complete and accurate records of such documents. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND KENT RHODES Each of the Company and Kent Rhodes hereby, jointly and severally, represents and warrants to EMKT and Top Team as follows: 3.1 DUE ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Schedule 3.1 sets forth the name, state of incorporation or formation and equity ownership of the Company in each Subsidiary of the Company. (A "SUBSIDIARY" of a Person is a corporation, partnership, joint venture, limited liability company and other entity in which such Person owns all or a majority of the equity interest or is required to be consolidated on such Person's balance sheet pursuant to GAAP.) The Company and each of its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and each such corporation has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, except in 5 such jurisdictions where the failure to be so qualified or licensed and in good standing would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects (the "CONDITION") of the Company and its Subsidiaries taken as a whole. 3.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by the Company, and the consummation by it of the Transactions, have been or prior to the Closing will be duly authorized and approved by its Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance of this Agreement by the Company and the consummation of the Transactions (other than the approval of this Agreement by the holders of a majority of the outstanding shares of Company Stock and any other classes of capital stock entitled to vote thereon, as required by the Delaware General Corporation Law). This Agreement has been duly executed and delivered by the Company and is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles. 3.3 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 1,000,000 shares of common stock, par value $0.01 per share, constituting the Company Common Stock, and 150,000 shares of preferred stock, par value $0.01 per share. As of the date of this Agreement, (i) 476,000 shares of Company Common Stock are issued and outstanding, (ii) no shares of preferred stock are outstanding and (iii) no shares of Company Common Stock are reserved for issuance pursuant to outstanding Company Options granted under the Stock Incentive Plans. All issued and outstanding shares of Company Stock have been validly issued and are fully paid and nonassessable, and are not subject to, nor were they issued in violation of, any preemptive rights. Except as set forth in this Section 3.3 or on Schedule 3.3, (i) there are no shares of capital stock of the Company authorized, issued or outstanding and (ii) there are not as of the date hereof, and on the Closing Date there will not be, any outstanding or authorized options, warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to Company Stock or any other shares of capital stock of the Company, pursuant to which the Company is or may become obligated to issue shares of Common Stock, any other shares of its capital stock or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of the capital stock of the Company. (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries have been duly authorized and validly issued, are fully paid and nonassessable, are not subject to, nor were they issued in violation of, any preemptive rights, and are owned, of record and beneficially, by the Company, free and clear of all liens, encumbrances, options or claims whatsoever. No shares of capital stock of any of the Company's Subsidiaries are reserved for issuance and there are no outstanding or authorized options, 6 warrants, rights, subscriptions, claims of any character, agreements, obligations, convertible or exchangeable securities, or other commitments, contingent or otherwise, relating to the capital stock of any Subsidiary of the Company, pursuant to which such Subsidiary is or may become obligated to issue any shares of capital stock of such Subsidiary or any securities convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of such Subsidiary. There are no restrictions of any kind that prevent the payment of dividends by any of the Company's Subsidiaries. Except for the Subsidiaries listed on Schedule 3.1, the Company does not own, directly or indirectly, any capital stock or other equity interest in any Person or have any direct or indirect equity or ownership interest in any Person and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan, capital contribution or otherwise) to or in any Person. 3.4 CONSENTS AND APPROVALS; NO VIOLATIONS. (a) The execution and delivery of this Agreement by the Sellers and the Company and the consummation by the Sellers and the Company of the Transactions will not: (1) violate any provision of the Certificate of Incorporation, as amended, or By-Laws of the Company or any of its Subsidiaries; (2) to the best knowledge of the Company and the Sellers violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to the Company or such Seller or any of its Subsidiaries or by which any of their respective properties or assets may be bound; (3) to the best knowledge of the Company and the Sellers require any filing with, or permit, consent or approval of, or the giving of any notice to, any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, payment or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease, franchise agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party, or by which it or any of their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. (b) Neither the Company nor any Subsidiary is in default or in violation (and no event has occurred which would notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Certification of Incorporation or By-Laws, (ii) any note, bond, mortgage, indenture, license, agreement, contract, lease, commitment or other obligation to which the Company or any of its Subsidiaries is a party or by which they or any of their properties or assets may be bound, or (iii) to the best knowledge of the Company and the Sellers any order, writ, injunction, decree, statute, rule or regulation applicable to the Company or any of its Subsidiaries, except in the case of clauses (i) and (ii) above for defaults or evaluations, which would not have a material adverse effect on the Condition of the Company and the Subsidiaries taken as a whole. 7 3.5 COMPANY REPORTS AND FINANCIAL STATEMENTS. Each of the consolidated balance sheets as of the end of the fiscal year ended December 31, 1999 and the ten-month period ended October 31, 1999 and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year ended December 31, 1999 and the ten-month period ended October 31, 1999 previously delivered to EMKT, were prepared in accordance with generally accepted accounting principles (as in effect in the United States from time to time) applied on a consistent basis ("GAAP"), except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the results of their operations and cash flows for the periods then ended. 3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 3.6, since October 31, 1999 (the "BALANCE SHEET DATE") (i) there has not been any material adverse change in the Condition of the Company and its Subsidiaries taken as a whole; (ii) the businesses of the Company and each of its Subsidiaries have been conducted only in the ordinary course; (iii) neither the Company nor any of its Subsidiaries has incurred any material liabilities (direct, contingent or otherwise) or engaged in any material transaction or entered into any material agreement outside the ordinary course of business; (iv) the Company and its Subsidiaries have not increased the compensation of any officer or granted any general salary or benefits increase to their employees other than in the ordinary course of business; and (v) neither the Company nor any of its Subsidiaries has taken any action referred to in Section 5.2 except as permitted or required thereby. 3.7 MINUTE BOOKS. The minute books of the Company and its Subsidiaries, as previously made available to EMKT and its representatives, contain accurate records of all meetings of and corporate actions or written consents by the stockholders and Boards of Directors of the Company and its Subsidiaries since December 31, 1995. 3.8 TITLE TO PROPERTIES; ENCUMBRANCES. Except as disclosed in Schedule 3.8, the Company and each of its Subsidiaries has good, valid and marketable title, or a valid leasehold interest in, to (i) all its material tangible properties and assets (real and personal), including, without limitation, all the properties and assets reflected in the consolidated balance sheet as of December 31, 1998 delivered pursuant to Section 3.5 (the "BALANCE SHEET") except as indicated in the notes thereto and except for properties and assets reflected in the Balance Sheet that have been sold or otherwise disposed of in the ordinary course of business, and (ii) all the tangible properties and assets purchased by the Company and any of its Subsidiaries since the Balance Sheet Date except for such properties and assets which have been sold or otherwise disposed of in the ordinary course of business; in each case subject to no encumbrance, lien, charge or other restriction of any kind or character, except for (1) liens reflected in the Balance Sheet, (2) liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto which do not materially detract from the value of, or impair the use of, such property by the Company or any of its Subsidiaries in the operation of its respective business and (3) liens for current taxes, assessments or governmental charges or levies on property not yet due and delinquent. 8 3.9 COMPLIANCE WITH LAWS. The Company and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.10 LITIGATION. Except as set forth in Schedule 3.10, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of the Company any investigation by) any governmental or other instrumentality or agency, pending, or, to the best knowledge, information and belief of the Company, threatened, against or affecting the Company or any of its Subsidiaries, or any of their properties or rights which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending or, to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenging the Transactions. Except as disclosed in Schedule 3.10, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding which could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole or on the ability of the Company or any Subsidiary to conduct its business as presently conducted. 3.11 EMPLOYEE BENEFIT PLANS. (a) LIST OF PLANS. Set forth in Schedule 3.11 is an accurate and complete list of all employee benefit plans ("EMPLOYEE BENEFIT PLANS") within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are otherwise exempt from the provisions of ERISA, established, maintained or contributed to by the Company or any of its Subsidiaries (including, for this purpose and for the purpose of all of the representations in this Section 3.11, all employers (whether or not incorporated) which by reason of common control are treated together with the Company as a single employer within the meaning of Section 414 of the Code. (b) STATUS OF PLANS. Neither the Company nor any of its Subsidiaries maintains or contributes to any Employee Benefit Plan subject to ERISA that is not in substantial compliance with ERISA or which has incurred any accumulated funding deficiency within the meaning of Section 412 or 418B of the Code, or that has applied for or obtained a waiver from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. Neither the Company nor any of its Subsidiaries has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan covering any employees of the Company or any of its Subsidiaries or ceased operations at any facility or withdrawn from any Employee Benefit Plan in a manner which could subject it to liability under Section 4062, 4063 or 4064 of ERISA, and the Company knows of no facts or circumstances which might give rise to any liability of the Company or any of its Subsidiaries to the PBGC under Title IV of ERISA that could reasonably be anticipated to result in any claims being made against the Company by the PBGC. Neither the Company nor any of its Subsidiaries has incurred any withdrawal liability (including any contingent or secondary withdrawal liability) within the meaning of Sections 9 4201 and 4204 of ERISA, to any Employee Benefit Plan that is a Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA), and no event has occurred, and there exists no condition or set of circumstances, that presents a material risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to a Multiemployer Plan. (c) CONTRIBUTIONS. Full payment has been made of all amounts which the Company or any of its Subsidiaries is required, under applicable law or under any Employee Benefit Plan or any agreement relating to any Employee Benefit Plan to which the Company or any of its Subsidiaries is a party, to have paid as contributions thereto as of the last day of the most recent fiscal year of such Employee Benefit Plan ended prior to the date hereof. The Company has made adequate provision for reserves to meet contributions that have not been made because they are not yet due under the terms of any Employee Benefit Plan or related agreements. Benefits under all Employee Benefit Plans are as represented and have not been increased subsequent to the date as of which documents have been provided to EMKT and Top Team. (d) RELATIONSHIP OF ACCRUED BENEFITS TO PENSION PLAN ASSETS. As of the Balance Sheet Date, (1) the aggregate current value of all accrued benefits (based upon actuarial assumptions which have been furnished to and relied upon by EMKT, Top Team and Sub) under all Employee Benefit Plans which are subject to Title IV of ERISA and which are Single Employer Plans (as defined in Section 4001(a)(15) of ERISA) did not exceed the aggregate current value of all assets of such Single Employer Plans allocable to such accrued benefits, and since the Balance Sheet Date, there has been (A) no material adverse change in the financial condition of any Single Employer Plan, (B) no change in the actuarial assumptions with respect to any Single Employer Plan and (C) no increase in benefits under any Single Employer Plan as a result of plan amendments, change in applicable law or otherwise, which individually or in the aggregate, would create any such excess; and (2) using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the Company and its Subsidiaries to all such Employee Benefit Plans which are Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each Multiemployer Plan ended prior to the date hereof, would not exceed $50,000. There has been no material change in the financial condition of any Multiemployer Plan or in any such actuarial assumption or computation method or in benefits under any Multiemployer Plan as a result of collective bargaining or otherwise since the close of each such fiscal year which, individually or in the aggregate, would materially increase such liability. (e) TAX QUALIFICATION. Each Employee Benefit Plan intended to be qualified under Section 401(a) of the Code has been determined to be so qualified by the Internal Revenue Service and nothing has occurred since the date of the last such determination which resulted or is likely to result in the revocation of such determination. (f) TRANSACTIONS. No Reportable Event (as defined in Section 4043 of ERISA) for which the 30-day notice requirement has not been waived by the PBGC has occurred with respect to any Employee Benefit Plan and neither the 10 Company nor any of its Subsidiaries has engaged in any transaction with respect to the Employee Benefit Plans which would subject it to a tax, penalty or liability for prohibited transactions under ERISA or the Code nor has any of their respective directors, officers or employees to the extent they or any of them are fiduciaries with respect to such Plans, breached any of their responsibilities or obligations imposed upon fiduciaries under Title I of ERISA or would result in any claim being made under or by or on behalf of any such Plans by any party with standing to make such claim. (g) OTHER PLANS. Neither the Company nor any of its Subsidiaries currently maintains any employee or non-employee benefit plans or any other foreign pension, welfare or retirement benefit plans other than those listed in Schedule 3.11. (h) DOCUMENTS. The Company has delivered or caused to be delivered to EMKT, Top Team and their counsel true and complete copies of (1) all Employee Benefit Plans as in effect, together with all amendments thereto which will become effective at a later date, as well as the latest Internal Revenue Service determination letter obtained with respect to any such Employee Benefit Plan qualified under Section 401 or 501 of the Code and (2) Form 5500 for the most recently completed fiscal year for each Employee Benefit Plan required to file such form. 3.12 EMPLOYMENT RELATIONS AND AGREEMENTS. (i) Except as set forth on Schedule 3.12, to the best knowledge of the Company and the Sellers, each of the Company and its Subsidiaries is in substantial compliance with all federal, state or other applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours, and has not and is not engaged in any unfair labor practice; (ii) no unfair labor practice complaint against the Company or any of its Subsidiaries is pending before the National Labor Relations Board; (iii) there is no labor strike, dispute, slowdown or stoppage actually pending or to the best knowledge of the Company and the Sellers threatened against or involving the Company or any of its Subsidiaries; (iv) to the best knowledge of the Company and the Sellers no representation question exists respecting the employees of the Company or any of its Subsidiaries; (v) to the best knowledge of the Company and the Sellers no grievance which might have a material adverse effect on the Condition of the Company and its Subsidiaries as a whole or the conduct of their respective businesses exists, no arbitration proceeding arising out of or under any collective bargaining agreement is pending and no claim therefor has been asserted; (vi) no collective bargaining agreement is currently being negotiated by the Company or any of its Subsidiaries; and (vii) neither the Company nor any of its Subsidiaries has experienced any material labor difficulty during the last three years. There has not been, and to the best knowledge of the Company, there will not be any change in relations with employees of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. Except as disclosed in Schedule 3.12, there exist no employment, consulting, severance or indemnification agreements between the Company and any director, officer or employee of the Company or any agreement that would give any Person the right to receive any payment from the Company as a result of the Purchase or Exchange. 3.13 CLIENT RELATIONS. Except as set forth on Schedule 3.13, there has not been, and to the best knowledge, information and belief of the Company and 11 the Sellers, there will not be, any change in relations with franchisees, customers or clients of the Company or any of its Subsidiaries as a result of the Transactions that could have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 3.14 TAXES. The Company has filed or caused to be filed, within the times and in the manner prescribed by law, all federal, state, local and foreign Tax Returns and tax reports that are required to be filed by, or with respect to, the Company or any of its Subsidiaries prior to the Closing Date. Such returns and reports are true, correct and complete in all material respects and reflect accurately all liability for Taxes of the Company and its Subsidiaries for the periods covered thereby. All federal, state, local and foreign Taxes (including interest and penalties) payable by, or due from, the Company or any of its Subsidiaries or reports due prior to the Closing Date have been fully paid or adequately disclosed. Tax liabilities for the period ending on the Closing Date have been adequately disclosed and fully provided for in the books and financial statements of the Company and its Subsidiaries. All deficiencies assessed as a result of any examination of such Tax Returns by federal, state, local or foreign tax authorities have been paid, and deficiencies for all taxes that have been proposed or asserted against the Company or any Subsidiary do not exceed $10,000 in the aggregate for all periods. To the best knowledge of the Company and the Sellers, no issue has been raised during the past five years by any federal, state, local or foreign taxing authority that, if raised with respect to any other period not so examined, could reasonably be expected to result in a proposed deficiency for any other period not so examined. The federal income tax liability of the Company and its Subsidiaries has been finally determined for all fiscal years to and including the fiscal year ended December 31, 1998. To the best knowledge of the Company and the Sellers, no examination of any Tax Return of the Company or any of its Subsidiaries is currently in progress. There are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is party to any agreement, contract or arrangement that would result, separately or in the aggregate, in the payment of any "excess parachute payments" within the meaning of Section 280G of the Code. The Company and each of its Subsidiaries have complied (and until the Closing will comply) in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitation, withholding of taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions under any foreign laws) and have, within the time and in the manner prescribed by law, withheld from employee wages and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under all applicable laws. For purposes of this Section 3.14, the term "TAXES" means all taxes, charges, fees, levies or other assessments, including without limitation income, gross receipts, excise, property, sales, transfer, license, payroll, withholding, capital stock and franchise taxes, imposed by the United States or any state, local or foreign government or subdivision or agency thereof, including any interest, penalties or additions thereto; and "TAX RETURN" means any report, return or other information or document required to be supplied to a taxing authority in connection with taxes. 3.15 LIABILITIES. Except as set forth on Schedule 3.15, neither the Company nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, 12 except as set forth in the Balance Sheet or referred to in the footnotes thereto, other than liabilities incurred subsequent to the Balance Sheet Date in the ordinary course of business not involving borrowings by the Company. Neither the Company nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 3.16 INTELLECTUAL PROPERTIES. In the operation of its business the Company and its Subsidiaries have used, and currently use, domestic and foreign patents, patent applications, patent licenses, software licenses, knowhow licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, trade secrets and other confidential proprietary information (collectively the "INTELLECTUAL PROPERTY"). Schedule 3.16 contains an accurate and complete list of all Intellectual Property (other than trade secrets and other confidential information) which is of material importance to the operation of the business of the Company or any of its Subsidiaries. Unless otherwise indicated in Schedule 3.16 the Company (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on Schedule 3.16 used in the operation of its business (including, without limitation, the exclusive right to use and license the same) and each item constituting part of the Intellectual Property which is owned by the Company or a Subsidiary and listed on Schedule 3.16 has been, to the extent indicated in Schedule 3.16, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, as are indicated in Schedule 3.16 and such registrations, filings and issuances remain in full force and effect. To the best knowledge of the Company and the Sellers, except as stated in such Schedule 3.16, there are no pending or threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property. Schedule 3.16 lists all notices or claims currently pending or received by the Company or any of its Subsidiaries during the past two years which claim infringement, contributory infringement, inducement to infringe, misappropriation or breach by the Company or any of its Subsidiaries of any domestic or foreign patents, patent applications, patent licenses and know-how licenses, trade names, trademark registrations and applications, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. Except as set forth in Schedule 3.16 hereto, there is, to the best knowledge, information and belief of the Company, no reasonable basis upon which a claim may be asserted against the Company or any of its Subsidiaries, for infringement, contributory infringement, inducement to infringe, misappropriation or breach of any domestic or foreign patents, patent applications, patent licenses, know-how licenses, trade names, trademark registrations and applications, common law trademarks, service marks, copyrights, copyright registrations or applications, trade secrets or other confidential proprietary information. To the best knowledge of the Company, except as indicated on Schedule 3.16, no Person is infringing the Intellectual Property. 3.17 MATERIAL CONTRACTS AND RELATIONSHIPS. (a) Except for agreements specifically identified on other Schedules, Schedule 3.17 sets forth a complete and correct list of the following: 13 (i) All agreements (or groups of agreements with one or more related entities) between the Company or any of its Subsidiaries and any customer or supplier in excess of $25,000 and all agreements extending beyond twelve months; (ii) All agreements that relate to the borrowing or lending by the Company (or any of its Subsidiaries) of any money or that create or continue any material claim, lien, charge or encumbrance against, or right of any third party with respect to, any asset of the Company or any of its Subsidiaries; (iii) All agreements by which the Company or any of its Subsidiaries leases any real property, has the right to lease any real property or leases capital equipment and all other leases involving the Company or any of its Subsidiaries as lessee or lessor; (iv) All agreements to which the Company or any of its Subsidiaries is a party not in the ordinary course of business; (v) All agreements to which the Company or any of its Subsidiaries, on the one hand, and any of Sellers or any of their respective Affiliates (as defined in Section 3.19) or Related Parties (as defined in Section 3.19), on the other hand, are parties or by which they are bound; (vi) All contracts or commitments relating to the employment of any Person or any commission or finder's fee arrangements with others; (vii) All material license agreements, whether as licensor or licensee; (viii) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that involve $25,000 or more or that extend for a period of one year or more; and (ix) All other agreements to which the Company or any of its Subsidiaries is a party or by which it is bound and that are or may be material to the Condition of the Company or any of its Subsidiaries. As used in this Section 3.17 the word "AGREEMENT" includes both oral and written contracts, leases, understandings, arrangements and all other agreements; and the term "MATERIAL CONTRACTS" means the agreements of the Company or any of its Subsidiaries required to be disclosed on Schedule 3.17, including agreements specifically identified in other Schedules. (b) All of the Material Contracts are in full force and effect, are valid and binding and are enforceable in accordance with their terms in favor of each of the Company and its Subsidiaries. To the best knowledge of the Company and the Sellers, there are no material liabilities of any party to any Material Contract arising from any breach or default of any provision 14 thereof and no event has occurred that, with the passage of time or the giving of notice or both, would constitute a breach or default by any party thereto. (c) The Company and each of its Subsidiaries has fulfilled all material obligations required pursuant to each Material Contract to have been performed by the Company or its Subsidiaries prior to the date hereof, and to the knowledge of the Sellers and the Company, the Company and each of its Subsidiaries will be able to fulfill, when due, all of its obligations under each of the Material Contracts that remain to be performed after the date hereof. (d) Schedules 3.17(c) sets forth a complete and correct list of each (i) customer (or related group of customers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, (ii) supplier (or related group of suppliers) with whom the Company or any of its Subsidiaries did $25,000 or more of business during the last fiscal year, and (iii) agent (or related group of agents) or representative (or related group of representatives) who was paid $25,000 or more by the Company and its Subsidiaries during the last fiscal year, respectively, which lists itemize the actual dollar amounts. (e) To the best knowledge of the Company and the Sellers, the Company and each of its Subsidiaries has maintained and continues to maintain good relations with its customers, suppliers and agents. 3.18 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth on Schedule 3.18, neither the Company nor any of its Subsidiaries nor any employee, agent or other person acting on the Company's or any of its Subsidiaries' behalf, including, but not limited to, any Seller, has, directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, competitor or governmental employee or official (domestic or foreign) (i) that would subject the Company or its any of its Subsidiaries to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) that, if not given in the past, would have had a material adverse effect on the Condition of the Company or any of its Subsidiaries. 3.19 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on Schedule 3.19, there have been no transactions, including purchases or sales of assets or entities, by or between the Company (or any of its Subsidiaries) and any Seller or Related Party since January 1, 1994 and there are no agreements or understandings now in effect between the Company and any Seller or Related Party. Schedule 3.19 also (i) states the amounts due from the Company (or any of its Subsidiaries) to any Seller or Related Party and the amounts due from any Seller or Related Party to the Company or any of its Subsidiaries, (ii) describes the transactions out of which such amounts due arose and (iii) describes any interest of any Seller or Related Party in any supplier or customer of, or any other entity that has had business dealings with, the Company or any of its Subsidiaries since January 1, 1994. After the Closing, there will be no obligations or other liabilities between each of the Company and any of its Subsidiaries, on the one hand, and any Seller or Related Party, on the other hand, other than pursuant to this Agreement and the Transactions contemplated hereby. "RELATED PARTY" means the Company and each of its Subsidiaries and Affiliates, including but not limited to each of the Sellers 15 and any member of the immediate family of any of the Sellers; and "AFFILIATE" means, in respect of any specified Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such specified Person or if such specified Person bears a familial relationship with such other Person. 3.20 BROKER'S OR FINDER'S FEE. No agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the Transactions. 3.21 ACCOUNTS RECEIVABLE. Except as set forth on Schedule 3.21, the accounts receivable of the Company as reflected in the Balance Sheet, to the extent uncollected on the date of this Agreement, and the accounts receivable reflected on the books of the Company are, on the basis of existing facts, valid and existing and fully collectible (except for a reserve of $25,000) within one year from the Closing Date, represent monies due for goods sold and delivered or services rendered, and (subject to the aforesaid reserve) are subject to no refunds or other adjustments (except discounts for prompt payment given in the ordinary course of business) and to no defenses, rights of setoff, assignments, restrictions, encumbrances or conditions enforceable by third parties on or affecting any thereof. The Company has never factored any of its accounts receivable. 3.22 INVENTORIES. The inventories reflected in the Balance Sheet were, and those reflected on the books of the Company since such date have been, determined and valued in accordance with generally accepted accounting principles applied on a consistent basis as reflected in the consolidated balance sheet, and existed on the respective dates. The inventories of the Company consist of items which are good and merchantable, and are of a quality and quantity presently usable or salable in the ordinary course of business. 3.23 INSURANCE. Schedule 3.23 sets forth a complete and correct list of all insurance policies and of all claims made by each of the Company or any of its Subsidiaries on any liability or other insurance policies during the past five years (other than worker's compensation claims). The Company (together with its Subsidiaries) has to the best knowledge of the Company and the Sellers adequate liability and other insurance policies insuring it against the risks of loss arising out of or related to its assets and business. Without limitation, as to the tangible real and personal property of the Company and its Subsidiaries, the Company reasonably believes that such insurance is adequate to cover the full replacement cost, less deductible amounts, of such tangible real and personal property. Schedule 3.23 is a complete and correct list of all insurance currently in place and accurately sets forth the coverages, deductible amounts, carriers and expiration dates thereof. Schedule 3.23 is a complete and correct list of all insurance with respect to which the policy period has expired, but for which certain of the coverage years are still subject to audit or retrospective adjustment by the carrier, and accurately sets forth such coverage years and the coverages, deductible amounts, carriers and expiration dates thereof. To the best knowledge of the Company and the Sellers there are no outstanding requirements or recommendations by any insurance company that issued any policy of insurance to the Company or any of its Subsidiaries or by any board of or by any governmental authority exercising similar functions that require or recommend any changes in the conduct of the business of the Company 16 or its Subsidiaries or any repairs or other work to be done on or with respect to any of the Company's or any of its Subsidiaries' assets. Except as set forth on Schedule 3.23, no notice or other communication has been received by the Company or its Subsidiaries from any insurance company within the five years preceding the date hereof canceling or materially amending or materially increasing the annual or other premiums payable under any of its insurance policies, and, to the knowledge of the Sellers and the Company, no such cancellation, amendment or increase of premiums is threatened. 3.24 NO POWERS OF ATTORNEY OR SURETYSHIPS. Except as set forth on Schedule 3.24, (a) the Company (together with its Subsidiaries) has not granted any general or special powers of attorney and (b) the Company (together with its Subsidiaries) does not have any obligation or liability (whether actual, contingent or otherwise) as guarantor, surety, co-signer, endorser, co-maker, indemnitor, obligor on an asset or income maintenance agreement or otherwise in respect of the obligation of any Person. 3.25 BANKING FACILITIES. Schedule 3.25 sets forth a complete and correct list of: (a) each bank, savings and loan or similar financial institution in which the Company or any of its Subsidiaries has an account or safety deposit box and the numbers of such accounts or safety deposit boxes maintained thereat; and (b) the names of all persons authorized to draw on each such account or to have access to any such safety deposit box, together with a description of the authority (and conditions thereto, if any) of each person with respect thereto. 3.26 ENVIRONMENTAL LIABILITIES. (a) Except as set forth on Schedule 3.26 hereto, to the best knowledge of the Company and the Sellers, neither the Company nor any of its Subsidiaries has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from, or in any way affecting, any of their properties or assets, or otherwise, in any manner which at the time of the action in question violated any Environmental Law, governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and to the best of the Company's and the Sellers' knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials. "ENVIRONMENTAL LAWS" means any and all federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any governmental authority regulating, relating to or imposing liability or standards of conduct concerning any Hazardous Material or environmental protection or health and safety, as now or may at any time hereafter be in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss. 1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. ss.ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide AcT ("FIFRA"), 7 U.S.C. ss.ss. 136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C. ss.ss. 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., the Superfund Amendment 17 and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act ("EPCRKA"), 42 U.S.C. ss. 11001 et seq., the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act as amended ("OSHA"), 29 U.S.C. ss. 655 and ss. 657, together, in each case, with any amendment thereto, and the regulations adopted and the official publications promulgated thereunder and all substitutions thereof. "HAZARDOUS MATERIALS" means any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law. (b) To the best of the Company's and Sellers' knowledge (i) neither the Company nor any of its Subsidiaries has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, where such would reasonably be expected to have a materially adverse effect on the business or condition (financial or otherwise) of the Company or any of its Subsidiaries, and (ii) no claims have been made against the Company or any of its Subsidiaries during the past five years and no presently outstanding citations or notices have been issued against the Company or any of its Subsidiaries, where such could reasonably be expected to have a materially adverse effect on the Condition of the Company or any of its Subsidiaries, which in either case have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by the Company or any of its Subsidiaries, or any of their employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to the Company or any of its Subsidiaries or any of their respective properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by the Company or any of its Subsidiaries or any other location where such could have a materially adverse effect on the business or condition (financial or otherwise) of the Company (or any of its Subsidiaries). 3.27 MACHINERY, EQUIPMENT AND OTHER PERSONAL PROPERTY, ETC. Except as set forth on Schedule 3.27, the Company (together with its consolidated Subsidiaries) owns or leases all of the machinery, equipment, vehicles, furniture, fixtures, leasehold improvements, repair parts, tools and other property (collectively, the "PERSONAL PROPERTY") used by or relating to the Company or its Subsidiaries. All such Personal Property is in good operating condition and sufficient to carry on the business of the Company and its Subsidiaries in the normal course as it is presently conducted and is free from defects, whether patent or latent. Except as set forth in Schedule 3.27, it is not necessary for the Company or any of its Subsidiaries to acquire or obtain the use of any additional personal property to carry on its business as presently and foreseeably to be conducted. 18 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EMKT AND TOP TEAM Each of EMKT and Top Team represents and warrants to the Company and the Sellers as follows: 4.1 DUE ORGANIZATION; GOOD STANDING AND CORPORATE POWER. Each of EMKT and Top Team is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. Each of EMKT and Top Team has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance of this Agreement by EMKT and Top Team, and the consummation by each of them of the Transactions, have been duly authorized by the Boards of Directors of EMKT and Top Team. No other corporate action on the part of either of EMKT or Top Team is necessary to authorize the execution, delivery and performance of this Agreement by each of EMKT and Top Team and the consummation of the Transactions. This Agreement has been duly executed and delivered by each of EMKT and Top Team and is a valid and binding obligation of each of EMKT and Top Team, enforceable against each of EMKT and Top Team in accordance with its terms, except that such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, and general equitable principles. 4.3 CONSENTS AND APPROVALS; NO VIOLATIONS. The execution and delivery of this Agreement by EMKT and Top Team and the consummation by EMKT and Top Team of the Transactions will not: (1) violate any provision of the Certificate of Incorporation or By-Laws of EMKT or Top Team; (2) violate any statute, ordinance, rule, regulation, order or decree of any court or of any governmental or regulatory body, agency or authority applicable to EMKT or Top Team or by which either of their respective properties or assets may be bound; (3) require any filing with, or permit, consent or approval of, or the giving of any notice to any governmental or regulatory body, agency or authority; or (4) result in a violation or breach of, conflict with, constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of EMKT or Top Team or any of their Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, franchise, permit, agreement, lease or other instrument or obligation to which EMKT or Top Team or any of their Subsidiaries is a party, or by which they or their respective properties or assets may be bound, excluding from the foregoing clauses (3) and (4) filings, notices, permits, consents and approvals the absence of which, and violations, breaches, defaults, conflicts and liens which, in the aggregate, would not have a material adverse effect on the business, properties, assets, liabilities, operations, results of operations, conditions (financial or otherwise) or prospects of EMKT and its Subsidiaries taken as a whole. 19 4.4 EMKT REPORTS AND FINANCIAL STATEMENTS. The consolidated balance sheet as of the end of the fiscal year ended June 30, 1999 as set forth in EMKT's annual report on Form 10-K, as filed with the Securities and Exchange Commission, and the consolidated statements of operations, consolidated statements of stockholders' equity and consolidated statements of cash flow for the fiscal year then ended, were prepared in accordance with GAAP, except as may be indicated therein or in the notes or schedules thereto, and fairly present the consolidated financial position of EMKT and its consolidated subsidiaries as of the date thereof and the results of their operations and cash flows for the fiscal year then ended. 4.5 CAPITALIZATION. The authorized capital stock of Top Team consists of 30,000,000 shares of common stock, par value $0.001 per share, and 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share ("PREFERRED STOCK"). As of the date of this Agreement, (i) 100 shares of Top Team Stock and no shares of Preferred Stock have been issued, options to purchase 2,200,000 shares of Top Team Stock have been reserved for issuance pursuant to options that have been or are to be granted under Top Team stock incentive plans, and rights to purchase 3,600,000 shares of Top Team Stock at $7.50 per share have been issued. 4.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in Schedule 4.6, since June 30, 1999 there has not been any material adverse change in the Condition of EMKT and its Subsidiaries taken as a whole. 4.7 COMPLIANCE WITH LAWS. To the best knowledge of EMKT, EMKT and each of its Subsidiaries are in compliance with all applicable laws, regulations, orders, judgments and decrees except where the failure to so comply would not have a material adverse effect on the Condition of the Company and its Subsidiaries taken as a whole. 4.8 LIABILITIES. Neither EMKT nor any of its Subsidiaries has any outstanding claims, liabilities or indebtedness, whether absolute, accrued, condensed, contingent or otherwise, except as set forth in its balance sheet for the fiscal year ended June 30, 1999 or referred to in the footnotes thereto, other than liabilities incurred subsequent to such date in the ordinary course of business not involving borrowings by the EMKT. Neither EMKT nor any of its Subsidiaries is in default in respect of the material terms and conditions of any indebtedness or other agreement. 4.9 LITIGATION. Except as set forth in the EMKT's Form 10-K for the fiscal year ended June 30, 1999, there is no action, suit, proceeding, at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the best knowledge, information and belief of EMKT, any investigation by or before) any governmental or other instrumentality or agency, pending or, to the best of knowledge, information and belief of EMKT, threatened against or affecting EMKT or any of its Subsidiaries or any of their properties or rights which could have a material adverse effect on Condition of EMKT and its Subsidiaries taken as a whole. There are no such suits, actions, claims, proceedings or investigations pending, or to the best knowledge, information and belief of the Company, threatened, seeking to prevent or challenge the Transactions. Except as disclosed in such Form 10-K, neither EMKT nor any of its Subsidiaries, is subject to any judgment, order or decree in any lawsuit or 20 proceeding which could have a material adverse effect on the Condition of EMKT and its Subsidiaries, taken as a whole, or on the ability of EMKT or any Subsidiary to conduct its business as presently conducted. 4.10 TAX STATUS. Neither EMKT nor Top Team has taken any action that would cause the Purchase not to qualify as an installment sale for federal income tax purposes or to cause the Exchange not to qualify as a tax-free contribution to capital under Section 351 of the Code. ARTICLE V ACTIONS PRIOR TO CLOSING DATE 5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS. During the period commencing on the date hereof and ending on the Closing Date, the Company shall, and shall cause each of its Subsidiaries to, upon reasonable notice, afford EMKT and Top Team, and their respective counsel, accountants and other authorized representatives, full access during normal business hours to the properties, books and records of the Company and its Subsidiaries in order that they may have the opportunity to make such investigations as they shall desire of the affairs of the Company and its Subsidiaries; such investigation shall not, however, affect the representations and warranties made by the Company in this Agreement. The Company acknowledges and agrees that Top Team's auditors will be performing an audit of the Company's financial statements (the "AUDIT"), and will provide all information and documents and cooperate in any way so as to permit the Audit to be completed promptly. The Company agrees to cause its officers and employees to furnish such additional financial and operating data and other information and respond to such inquiries as EMKT and Top Team shall from time to time request. 5.2 CONDUCT OF THE BUSINESS OF THE COMPANY PENDING THE CLOSING DATE. The Company agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or Schedule 5.2 or otherwise consented to or approved in writing by EMKT (which consent shall not be unreasonably withheld, delayed or conditioned), during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of its Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business and will use their best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensers, suppliers, distributors, clients and others having business relationships with them; (b) Neither the Company nor any of its Subsidiaries shall (i) make any change in or amendment to its Certificate of Incorporation or By-Laws (or comparable governing documents); (ii) issue or sell any shares of its capital stock (other than in connection with the exercise of Company Options outstanding on the date hereof) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock or any of its other securities, or make any other changes in its capital structure; (iii) declare, 21 pay or make any dividend or other distribution or payment with respect to, or split, redeem or reclassify, any shares of its capital stock; (iv) enter into any contract or commitment, except for contracts in the ordinary course of business, including without limitation, any acquisition of a material amount of assets or securities, any disposition of a material amount of assets or securities or release or relinquish any material contract rights; (v) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently, or otherwise) for the obligations of any other Person other than a Subsidiary in the ordinary course of business and consistent with past practice; (vi) incur, assume or prepay any indebtedness or other material liabilities other than in the ordinary course of business and consistent with past practices, except that the Company may prepay its legal fees in connection with the Transactions to the extent they do not exceed the amount set forth in Section 9.1(a); (vii) make any loans, advances or capital contributions to, or investments in, any other Person, other than to Subsidiaries; (viii) authorize capital expenditures in excess of the amount currently budgeted therefor; (ix) permit any insurance policy naming the Company or any Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; (x) amend any employee or nonemployee benefit plan or program, employment agreement, license agreement or retirement agreement, or pay any bonus or contingent compensation, except in each case in the ordinary course of business consistent with past practice prior to the date of this Agreement; (xi) agree, in writing or otherwise, to take any of the foregoing actions; or (xii) agree to the settlement of any litigation; (c) The Company shall not, and shall not permit any of its Subsidiaries to (i) take any action, engage in any transaction or enter into any agreement which would cause any of the representations or warranties set forth in Article III to be untrue as of the Closing Date, or (ii) purchase or acquire, or offer to purchase or acquire, any shares of capital stock of the Company and the Company shall not sell or pledge or agree to sell or pledge any stock owned by it in any of the Subsidiaries, or allow any Subsidiary to pledge or agree to sell or pledge any stock owned by it in any other Subsidiary. (d) The Company will use its commercially reasonable best efforts to deliver to EMKT prior to the Closing a consolidated balance sheet as of the end of the fiscal year ended July 31, 1999 and the related consolidated statements of operations, stockholders' equity and cash flows for the fiscal year then ended, prepared in accordance with GAAP and on a basis consistent with that of the statements delivered pursuant to Section 3.5. 5.3 BEST EFFORTS. Each of the Company, EMKT and Top Team shall, and the Company shall cause each of its Subsidiaries to, cooperate and use their respective commercially reasonable best efforts to take, or cause to be taken, all appropriate action, and to make, or cause to be made, all filings necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, their respective best efforts to obtain, prior to the Closing Date, all licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and its Subsidiaries as are necessary for consummation of the Transactions and to fulfill the conditions to the Transactions; provided, however, that no loan agreement or contract for borrowed money shall be repaid except as currently required by its terms, in whole or in 22 part, and no contract shall be amended to increase the amount payable thereunder or otherwise to be more burdensome to the Company or any of its Subsidiaries in order to obtain any such consent, approval or authorization without first obtaining the written approval of EMKT and Top Team (which shall not be unreasonably withheld or delayed). 5.4 NO SOLICITATION OF OTHER OFFERS. Neither the Company nor any of its Subsidiaries, shall, directly or indirectly, take (and the Company shall not authorize or permit its or its Subsidiaries, officers, directors, employees, representatives, investment bankers, attorneys, accountants or other agents or affiliates, to so take) any action to encourage, solicit, initiate or, subject to the fiduciary duties of the Board of Directors under applicable law as advised in writing by counsel, participate in any way in discussions or negotiations with, or furnish any information to, any Person (other than EMKT, Top Team or their respective officers, directors, representatives, agents, affiliates or associates) in connection with any possible or proposed merger or other business combination, sale or other disposition of assets, sale of shares of capital stock or similar transactions involving the Company or any Subsidiary or division of the Company. The Company will promptly communicate to EMKT and Top Team the terms of any proposal or inquiry that it may receive in respect of any such transaction, or of any such information requested from it or of any such negotiations or discussions being sought to be initiated with the Company. ARTICLE VI CONDITIONS PRECEDENT TO TRANSACTIONS 6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT, TOP TEAM AND THE COMPANY AND THE SELLERS. The respective obligations of EMKT and Top Team, on the one hand, and the Company and the Sellers, on the other hand, to effect the Transactions are subject to the satisfaction or waiver (subject to applicable law) on or prior to the Closing Date of each of the following conditions: (a) INJUNCTION. No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority which prohibits the consummation of the Transactions and which is in effect on the Closing Date; and (b) STATUTES. No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any court or governmental authority which prohibits the consummation of the Transactions or has the effect of making the purchase of the Company Stock illegal. 6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF EMKT AND TOP TEAM. The obligations of EMKT and Top Team to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of the Company contained herein shall be true and correct in all material respects as of 23 the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY COMPANY. The Company shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; (c) EMPLOYMENT AGREEMENTS. Kent Rhodes, Ph.D. and Todd Knowlton shall each have entered into an employment agreement with Top Team in form and substance reasonably satisfactory to Top Team; (d) JOINDER AGREEMENTS. Each Seller other than Kent Rhodes shall have executed a Joinder Agreement in form and substance reasonably satisfactory to EMKT; and (e) OTHER DOCUMENTS. EMKT and Top Team shall have received such other documents, opinions, agreements, certificates and instruments as they shall reasonably require in connection with the consummation of the Transactions. 6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE SELLERS. The obligations of the Company and the Sellers to effect the Transactions are also subject to the satisfaction or waiver, on or prior to the Closing Date, of each of the following conditions: (a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties of EMKT and Top Team contained herein shall be true and correct in all material respects as of the date hereof and at and as of the Closing, with the same force and effect as though made on and as of the Closing Date; (b) PERFORMANCE BY EMKT AND TOP TEAM. Each of EMKT and Top Team shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with by it prior to the Closing Date; and (c) STOCK INCENTIVE PLAN. Top Team shall have implemented a stock option plan and restricted stock purchase plan prior to the Closing Date and shall have reserved for issuance up to 25,000 shares of Top Team stock for issuance to former employees of the Company pursuant to such plan; and (d) REGISTRATION RIGHTS. Top Team and Sellers shall have entered into an agreement regarding registration rights for the Purchase Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. EMKT and Sellers shall have entered into an agreement regarding registration rights for the Exchange Consideration in form and content mutually satisfactory to the parties thereto. Top Team and the Sellers agree to negotiate the terms of such agreement in good faith and as soon as possible after the execution hereof. 24 ARTICLE VII TERMINATION AND ABANDONMENT 7.1 TERMINATION. This Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Closing Date: (a) by mutual consent of the Company and the Sellers, on the one hand, and of EMKT and Top Team, on the other hand; (b) by EMKT and Top Team, on the one hand, or the Company and the Sellers, on the other hand, if the Closing shall not have occurred within six months after the date of this Agreement or there has been a material breach of any representation, warranty, obligation, covenant or agreement set forth in this Agreement on the part of the other party; (c) by EMKT and Top Team, if any of the conditions specified in Sections 6.1 or 6.2 have not been met or waived by EMKT and Top Team prior to or at such time as such condition can no longer be satisfied; or (d) by the Company and the Sellers, if any of the conditions specified in Sections 6.1 or 6.3 have not been met or waived by the Company and the Sellers prior to or at such time as such condition can no longer be satisfied. 7.2 EFFECT OF TERMINATION. In the event of the termination of this Agreement pursuant to Section 7.1 by EMKT or Top Team, on the one hand, or the Company and the Sellers, on the other hand, written notice thereof shall forthwith be given to the other party or parties specifying the provision hereof pursuant to which such termination is made, and this Agreement shall become void and have no effect, and there shall be no liability hereunder on the part of EMKT, Top Team, the Company or the Sellers, except that Section 9.1, Article VIII and this Section 7.2 shall survive any termination of this Agreement. Nothing in this Section 7.2 shall relieve any party to this Agreement of liability for breach of this Agreement. ARTICLE VIII INDEMNIFICATION 8.1 INDEMNIFICATION BY SELLERS. Each Seller, for a period of three years from the date hereof, shall severally and not jointly, indemnify and hold harmless EMKT and Top Team and each of their affiliates, directors, officers, employees, attorneys, agents and representatives (collectively, the "AFFILIATED PARTIES") in respect of any and all claims, losses, damages, liabilities, 25 declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the prime rate as reported from time to time by Bank of America NT & SA (the "PRIME RATE") then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by such Seller, in connection with each and all of the following: (a) Any breach of any representation or warranty made by such Seller in Article II or III of this Agreement; (b) Any misrepresentation contained in any written statement or certificate furnished by such Seller individually pursuant to this Agreement or in connection with the Transactions; and (c) Any breach of any covenant, agreement or obligation of such Seller individually contained in this Agreement or any other instrument contemplated by this Agreement. No claim, demand, suit or cause of action shall be brought against such Seller under this Section 8.1 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from such Seller for all claims hereunder relating back to the first dollar. 8.2 INDEMNIFICATION BY SELLERS JOINTLY AND SEVERALLY. The Sellers shall, for a period of three years from the date hereof, jointly and severally indemnify and hold harmless EMKT and Top Team and each of their respective Affiliated Parties in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys, accountants' and consultants' fees and other expenses) reasonably incurred by EMKT or Top Team or their respective Affiliated Parties, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date such cash disbursements were made by EMKT or Top Team or any of their Affiliated Parties until paid by the Sellers, in connection with each and all of the following: (a) Subject to Section 8.4 hereof, any breach of any representation or warranty made by the Sellers or the Company in Article III of this Agreement or pursuant hereto; (b) Any misrepresentation contained in any written statement or certificate furnished by Sellers and/or the Company pursuant to this Agreement or in connection with the Transactions; or (c) Any breach of any covenant, agreement or obligation of Sellers and/or the Company contained in this Agreement or any other instrument contemplated by this Agreement. 26 No claim, demand, suit or cause of action shall be brought against the Sellers under this Section 8.2 unless and until the aggregate amount of claims under Sections 8.1 and 8.2 exceeds $50,000, in which event EMKT and Top Team and their respective Affiliated Parties shall be entitled to indemnification from the Sellers for all claims hereunder relating back to the first dollar. 8.3 INDEMNIFICATION BY EMKT AND TOP TEAM. EMKT and Top Team shall, for a period of three years from the Closing Date, jointly and severally, indemnify and hold harmless each of Sellers in respect of any and all claims, losses, damages, liabilities, declines in value, penalties, interest, costs and expenses (including, without limitation, any attorneys', accountants' and consultants' fees and other expenses) reasonably incurred by Sellers, together with interest on cash disbursements in connection therewith, at an annual rate equal to the Prime Rate then in effect, from the date that such cash disbursements were made by Sellers until paid by EMKT or Top Team, in connection with each and all of the following: (a) Any breach of any representation or warranty made by EMKT or Top Team in this Agreement or pursuant hereto; or (b) Any breach of any covenant, agreement or obligation of EMKT or Top Team contained in this Agreement or any other instrument contemplated by this Agreement; or (c) Any misrepresentation contained in any statement or certificate furnished by EMKT or Top Team pursuant to this Agreement or in connection with the Transactions. No claim, demand, suit or cause of action shall be brought against EMKT or Top Team under this Section 8.3 unless and until the aggregate amount of claims under this Section 8.3 exceeds $50,000, in which event, Sellers shall be entitled to indemnification from EMKT or Top Team for all claims hereunder relating back to the first dollar. 8.4 INDEMNIFICATION BY SELLERS FOR TAX LIABILITIES. In addition to, and not by way of limitation on, the indemnities set forth in this Article VIII, the Sellers shall jointly and severally indemnify and hold harmless on an after-tax basis EMKT and Top Team against all Taxes of the Company (together with its consolidated Subsidiaries) for all taxable periods ending on or before the date hereof or otherwise attributable to the operations, transactions, assets, or income of the Company or its Subsidiaries prior to the date hereof, together with any expenses (including, without limitation, settlement costs and any legal, accounting and other expenses) incurred in connection with the contesting, collection or assessment of such Taxes, and together with interest at an annual rate equal to the Prime Rate then in effect, but not for losses due to any action or inaction taken or required to be taken by EMKT or Top Team hereunder. Notwithstanding Sections 8.1 and 8.2, the Sellers' obligation to indemnify EMKT and Top Team pursuant to this Section 8.4 shall continue until 90 days after all applicable statutes of limitations have expired. For purposes of this Section 8.4, the term "AFTER-TAX BASIS" means determined after giving effect to (i) the receipt by the indemnified party of such payment, if such receipt is taxable and (ii) any tax deduction available on account of the payment of such Taxes; and assuming that Taxes are payable at a combined effective rate of 45% of taxable income. 27 8.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for indemnification hereunder, the party entitled to indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party obligated to provide indemnification (the "INDEMNIFYING PARTY") of the claim and, when known, the facts constituting the basis for such claim; provided, however, that the failure to so notify the indemnifying party shall not relieve the indemnifying party of its obligation hereunder to the extent such failure does not materially prejudice the indemnifying party. In the event of any claim for indemnification hereunder resulting from or in connection with any claim or legal proceedings by a third party, the notice to the indemnifying party shall specify, if known, the amount or an estimate of the amount of the liability arising therefrom. If any claims shall arise against Sellers hereunder, EMKT and Top Team may (but shall not be required to) set-off against any amount then or thereafter payable (but not yet paid) to such Seller. 8.6 DEFENSE CLAIMS. In connection with any claim giving rise to indemnity hereunder resulting from or arising out of any claim or legal proceeding by a Person who is not a party to this Agreement, the indemnifying party at its sole cost and expense and with counsel reasonably satisfactory to the indemnified party may, upon written notice to the indemnified party, assume the defense of any such claim or legal proceeding if (a) the indemnifying party acknowledges to the indemnified party in writing, within 15 days after receipt of notice from the indemnifying party, its obligations to indemnify the indemnified party with respect to all elements of such claim, (b) the indemnifying party provides the indemnified party with evidence reasonably acceptable to the indemnified party that the indemnifying party will have the financial resources to defend against such third-party claim and fulfill its indemnification obligations hereunder, (c) the third-party claim involves only money damages and does not seek an injunction or other equitable relief, and (d) settlement or an adverse judgment of the third party claim is not, in the good faith judgment of the indemnified party, likely to establish a pattern or practice adverse to the continuing business interests of the indemnified party. The indemnified party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense; provided, however, that if there are one or more legal defenses available to the indemnified party that conflict with those available to the indemnifying party, or if the indemnifying party fails to take reasonable steps necessary to defend diligently the claim after receiving notice from the indemnified party that it believes the indemnifying party has failed to do so, the indemnified party may assume the defense of such claim; provided, further, that the indemnified party may not settle such claim without the prior written consent of the indemnifying party, which consent may not be unreasonably withheld. If the indemnified party assumes the defense of the claim, the indemnifying party shall reimburse the indemnified party for the reasonable fees and expenses of counsel retained by the indemnified party and the indemnifying party shall be entitled to participate in (but not control) the defense of such claim, with its counsel and at its own expense. The parties agree to render, without compensation, to each other such assistance as they may reasonably require of each other in order to insure the proper and adequate defense of any action, suit or proceeding, whether or not subject to indemnification hereunder. Notwithstanding the foregoing, if any of Sellers assumes the defense of a claim for Taxes for which they are obligated to indemnify EMKT, Top Team or any of its Subsidiaries, then such indemnifying party shall not settle or otherwise agree to a resolution of a dispute with respect to such claim if that settlement or resolution would have an adverse impact on the liability of EMKT, Top Team or any of their respective 28 Subsidiaries for any taxable period ending after the date hereof without the express written consent of EMKT, Top Team or such affected Subsidiary, which consent will not be unreasonably withheld or delayed. 8.7 MANNER OF INDEMNIFICATION. All indemnification payments hereunder shall be effected by payment of cash or delivery of a certified or official bank check in the amount of the indemnification liability. 8.8 LIMITATIONS ON INDEMNIFICATION. Notwithstanding the provisions of Section 8.1, 8.2 and 8.3 to the effect that an indemnifying party's obligation under such section shall expire on the third anniversary hereof, such obligation shall continue (i) as to any matter as to which a claim is submitted in writing to the indemnifying party prior to such third anniversary and identified as a claim for indemnification pursuant to this Agreement or (ii) as to any matter that is based upon willful fraud by the indemnifying party, until such time as such claims and matters are resolved. ARTICLE IX MISCELLANEOUS 9.1 FEES AND EXPENSES. (a) Except as provided in paragraph (b) below, all costs and expenses incurred in connection with this Agreement and the consummation of the Transactions shall be paid by the party incurring such costs and expenses; provided that Top Team shall reimburse the Sellers for the reasonable fees and costs of their counsel, not to exceed $20,000, and the Sellers will pay for the amount in excess thereof. (b) If either (i) at any time while this Agreement is in effect, the Company shall have consummated, or entered into an agreement providing for, a merger of the Company with, sale of all or a substantial part of the assets of the Company to, or any other business combination involving the Company with, another Person, or (ii) this Agreement is terminated other than solely because of a wilful and material breach of the representations or warranties of EMKT or Top Team or a wilful failure of EMKT or Top Team to fulfill a material covenant or contained herein, then, in the case of clause (i) or (ii) above, the Company shall, within two days after the first of such events has occurred, pay EMKT a fee in lieu of reimbursement for such expenses equal to $40,000 plus the actual costs of the Audit. 9.2 REPRESENTATIONS AND WARRANTIES. The respective representations and warranties of the Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, contained herein or in any certificates or other documents delivered prior to or at the Closing shall not be deemed waived or otherwise affected by any investigation made by any party. 9.3 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties hereto, by action taken by or on behalf of the respective Boards of Directors of the Company, EMKT, Top Team or Sub, may (i) extend the time for the 29 performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein by any other applicable party or in any document, certificate or writing delivered pursuant hereto by any other applicable party or (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 9.4 PUBLIC ANNOUNCEMENTS. The Company and the Sellers, on the one hand, and EMKT and Top Team, on the other hand, agree to consult promptly with each other prior to issuing any press release or otherwise making any public statement with respect to the Transactions , and shall not issue any such press release or make any such public statement prior to such consultation and review by the other party of a copy of such release or statement, unless required by applicable law. 9.5 NOTICES. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered in person or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (a) if to the Company, to it at: OnCourse Network, Inc. 2222 Michelson Drive Suite 222-121 Irvine, California 92612 Attention: President Fax ________________ (b) if to any Seller to his, her or its address on the signature pages hereof (c) if to either EMKT or Top Team, to it at: c/o Full Moon Interactive Inc. 1111 Tamarind Avenue Hollywood, California 90038 Attention: President Fax: 323-856-3011 with a copy to: eMarketplace, Inc. 225 W. Julian Street, Suite 100 San Jose, California 95110 Attention: Chairman Fax 408 275-1958 30 And to: Kaye Scholer Fierman, Hays & Handler, LLP 1999 Avenue of the Stars Los Angeles, California 90067 Attention: B.J. Yankowitz, Esq. Fax: 310-788-1200 or to such other Person or address as any party shall specify by notice in writing to each of the other parties. All such notices, requests, demands, waivers and communications shall be deemed to have been received on the date of delivery unless if mailed, in which case on the third business day after the mailing thereof except for a notice of a change of address, which shall be effective only upon receipt thereof. 9.6 ENTIRE AGREEMENT. This Agreement and the exhibits, schedules and other documents referred to herein or delivered pursuant hereto, collectively contain the entire understanding of the parties hereto with respect to the subject matter contained herein and supersede all prior agreements and understandings, oral and written, with respect thereto. 9.7 BINDING EFFECT; BENEFIT; ASSIGNMENT. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.8 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified and supplemented in writing by the parties hereto in any and all respects before the Closing Date. 9.9 FURTHER ACTIONS. Each of the parties hereto agrees that, subject to its legal obligations, it will use its best efforts to fulfill all conditions precedent specified herein, to the extent that such conditions are within its control, and to do all things reasonably necessary to consummate the Transactions. 9.10 HEADINGS. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only, do not constitute a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. References to Articles, Sections, Exhibits and Schedules, unless otherwise specified, are to Articles, Sections, Exhibits and Schedules of and to this Agreement. 31 9.11 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. 9.12 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof. 9.13 SEVERABILITY. If any term, provision, covenant or restriction contained in this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained in this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 9.14 "PERSON" DEFINED. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a group and a government or other department or agency thereof. IN WITNESS WHEREOF, each of EMKT, Top Team, the Sellers and the Company have caused this Agreement to be executed by their respective officers (if applicable) hereunto duly authorized, all as of the date first above written. EMKT: EMARKETPLACE, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors TOP TEAM: TOP TEAM, INC. By: /s/ Robert M. Wallace -------------------------------------- Robert M. Wallace, Chairman of the Board of Directors 32 THE COMPANY: ONCOURSE NETWORK, INC. By: /s/ Kent Rhodes -------------------------------------- Kent Rhodes, Ph.D., President SELLERS: /s/ Kent Rhodes ------------------------------------------ Kent Rhodes, Ph.D. Address: c/o OnCourse Network, Inc. 2222 Michelson Drive Suite 222-121 Irvine, California 92612 Fax: _________________________ 33 EX-7.C 8 EXHIBIT (C)(VII) CERTIFICATE OF DESIGNATION, VOTING POWERS, PREFERENCES AND RIGHTS OF SERIES A PREFERRED STOCK OF TOPTEAM, INC. Pursuant to Section 151(g) of the Delaware General Corporation Law, I, Robert Wallace, Chairman of the Board of Directors of TopTeam, Inc., a Delaware corporation (the "CORPORATION"), hereby certify that the following is a true and correct copy of a resolution duly adopted by the Corporation's Board of Directors by unanimous written consent on October 9, 1999, and that the resolution has not been rescinded or amended and is in full force and effect at the date hereof: RESOLVED, that pursuant to the authority expressly granted to and vested in the Corporation's Board of Directors by the Corporation's Certificate of Incorporation, the Board of Directors hereby creates a series of Preferred Stock of the Corporation, to be designated "Series A Convertible Preferred Stock," consisting of 250,000 shares (the "SERIES A PREFERRED STOCK"), and hereby fixes the voting powers, designations, preferences and relative participating, optional and other rights, and the qualifications, limitations or restrictions thereof, of the Series A Preferred Stock, as follows: 1. DIVIDEND PROVISIONS. (a) The holders of shares of Series A Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the corporation) on the Common Stock of the corporation, at the rate of $0.24 per share per annum, payable on each February1, May 1, August 1 and November 1, beginning February 1, 2000; provided, however, that the dividends per annum on the Series A Preferred Stock (as determined on a per-annum basis and an as-converted basis for the Series A Preferred Stock), shall not be less, on a per-share basis, than the amount paid on any outstanding shares of Common Stock or other series of stock of the corporation that is subordinate in right of liquidation payments. Such dividends shall accrue on each share from the date of issuance thereof, and shall accrue from day to day, whether or not earned or declared. Such dividends shall be cumulative so that, except as provided below, if such dividends in respect of any previous or current quarterly dividend period, at the quarterly rate specified above, shall not have been paid, the deficiency shall first be fully paid before any dividend or other distribution shall be paid on or declared and set apart for the Common Stock. Any accumulation of dividends on the Series A Preferred Stock shall not bear interest. Cumulative dividends with respect to a share of Series A Preferred Stock which are accrued, payable or in arrears shall, upon conversion of such share to Common Stock, be paid to the extent assets are legally available therefor and any amounts for which assets are not legally available shall be paid promptly as assets become legally available therefor; any partial payment will be made pro rata among the holders of such shares. (b) Unless full dividends on the Series A Preferred Stock for all past dividend periods and the then current dividend period shall have been paid or accrued and a sum sufficient for the payment thereof set apart: (A) no dividend whatsoever (other than a dividend payable solely in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock) shall be paid or declared, and no distribution shall be made, on any Common Stock, and (B) no shares of Common Stock shall be purchased, redeemed, or acquired by the corporation and no funds shall be paid into or set aside or made available for a sinking fund for the purchase, redemption, or acquisition thereof; provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock held by employees, officers, directors, consultants or other persons performing services for the corporation or any wholly owned subsidiary (including, but not by way of limitation, distributors and sales representatives) that are subject to restrictive stock purchase agreements under which the corporation has the option to repurchase such shares at cost upon the occurrence of certain events, such as the termination of employment. 2. LIQUIDATION PREFERENCE. (a) In the event of any liquidation, dissolution or winding up of the corporation, either voluntary or involuntary, the holders of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of $4.00 for each outstanding share of Series A Preferred Stock (the "ORIGINAL SERIES A ISSUE PRICE") and an amount equal to accrued but unpaid dividends on such share (such amount of accrued but unpaid dividends being referred to herein as the "PREMIUM"). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then the entire assets and funds of the corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the amount of such stock owned by each such holder. (b) After the distributions described in subsection (a) above have been paid, the remaining assets of the corporation available for distribution to shareholders shall be distributed among the holders of Series A Preferred Stock and Common Stock pro rata based on the number of shares of Common Stock held by each (assuming full conversion of all such Series A Preferred Stock). (c) (i) For purposes of this Section 2, a liquidation, dissolution or winding up of the corporation shall be deemed to be occasioned by, or to include, (A) the acquisition of the corporation by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but excluding any merger effected exclusively for the purpose of changing the domicile of the corporation); or (B) a sale of all or substantially all of the assets of the corporation, unless the corporation's shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the 2 corporation's acquisition or sale or otherwise) hold at least 50 percent of the voting power of the surviving or acquiring entity (excluding for this purpose any securities owned by eMarketplace, Inc.). (ii) In any of such events, if the consideration received by the corporation is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows: (A) Securities not subject to investment letter or other similar restrictions on free marketability: (1) If traded on a securities exchange or through NASDAQ-NMS, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the 30-day period ending three days prior to the closing; (2) If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the 30-day period ending three days prior to the closing; and (3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the corporation and the holders of at least a majority of the voting power of all then outstanding shares of Series A Preferred Stock. (B) The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder's status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A)(1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the corporation and the holders of at least a majority of the voting power of all then outstanding shares of Series A Preferred Stock. (iii) In the event the requirements of this subsection 2(c) are not complied with, the corporation shall forthwith either: (A) cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or (B) cancel such transaction, in which event the rights, preferences and privileges of the holders of the Series A Preferred Stock shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 2(c)(iv) hereof. (iv) The corporation shall give each holder of record of Series A Preferred Stock written notice of such impending transaction not later 3 than 20 days prior to the shareholders' meeting called to approve such transaction, or 20 days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 2, and the corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than 20 days after the corporation has given the first notice provided for herein or sooner than 10 days after the corporation has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of at least 50 % of the then outstanding shares of Series A Preferred Stock. 3. REDEMPTION. (a) At any time after December 31, 2000, but on a date (the "REDEMPTION DATE") within 30 days after the receipt by the corporation of a written request from the holders of not less than a majority of the then outstanding Series A Preferred Stock that all or some of such holders' shares be redeemed, and concurrently with surrender by such holders of the certificates representing such shares, the corporation shall, to the extent it may lawfully do so, redeem the shares specified in such request by paying in cash therefor a sum per share equal to the sum of the Original Series A Issue Price plus the Premium with respect thereto. Any redemption effected pursuant to this subsection 3(a) shall be made on a pro rata basis among the holders of the Series A Preferred Stock in proportion to the number of shares of Series A Preferred Stock then held by such holders. (b) At least 15 but no more than 30 days prior to the Redemption Date, written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice is given) of the Series A Preferred Stock to be redeemed, at the address last shown on the records of the corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Redemption Date, the Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to the corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares to be redeemed (the "REDEMPTION NOTICE"). Except as provided in subsection (3)(c) on or after the Redemption Date, each holder of Series A Preferred Stock to be redeemed shall surrender to the corporation the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be canceled. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. (c) From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of shares of Series A Preferred Stock designated for redemption in the Redemption Notice as holders of Series A Preferred Stock (except the right to receive the Redemption Price without interest upon surrender of their certificate or 4 certificates) shall cease with respect to such shares, and such shares shall not thereafter be transferred on the books of the corporation or be deemed to be outstanding for any purpose whatsoever. Subject to the rights of series of Preferred Stock which may from time to time come into existence, if the funds of the corporation legally available for redemption of shares of Series A Preferred Stock on any Redemption Date are insufficient to redeem the total number of shares of Series A Preferred Stock to be redeemed on such date, those funds which are legally available will be used to redeem the maximum possible number of such shares ratably among the holders of such shares to be redeemed based upon their holdings of Series A Preferred Stock. The shares of Series A Preferred Stock not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. Subject to the rights of series of Preferred Stock which may from time to time come into existence, at any time thereafter when additional funds of the corporation are legally available for the redemption of shares of Series A Preferred Stock, such funds will immediately be used to redeem the balance of the shares which the corporation has become obliged to redeem on any Redemption Date but which it has not redeemed. (d) On or prior to each Redemption Date, the corporation shall deposit the Redemption Price of all shares of Series A Preferred Stock designated for redemption in the Redemption Notice, and not yet redeemed or converted, with a bank or trust corporation having aggregate capital and surplus in excess of $100,000,000 as a trust fund for the benefit of the respective holders of the shares designated for redemption and not yet redeemed, with irrevocable instructions and authority to the bank or trust corporation to publish the notice of redemption thereof and pay the Redemption Price for such shares to their respective holders on or after the Redemption Date, upon receipt of notification from the corporation that such holder has surrendered his, her or its share certificate to the corporation pursuant to subsection (3)(b) above. As of the date of such deposit (even if prior to the Redemption Date), the deposit shall constitute full payment of the shares to their holders, and from and after the date of the deposit the shares so called for redemption shall be redeemed and shall be deemed to be no longer outstanding, and the holders thereof shall cease to be shareholders with respect to such shares and shall have no rights with respect thereto except the rights to receive from the bank or trust corporation payment of the Redemption Price of the shares, without interest, upon surrender of their certificates therefor, and the right to convert such shares as provided in Section 4 hereof. Such instructions shall also provide that any moneys deposited by the corporation pursuant to this subsection (3)(d) for the redemption of shares thereafter converted into shares of the corporation's Common Stock pursuant to Section 4 hereof prior to the Redemption Date shall be returned to the Corporation forth with upon such conversion. The balance of any moneys deposited by the corporation pursuant to this subsection (3)(d) remaining unclaimed at the expiration of two years following the Redemption Date shall thereafter be returned to the corporation upon its request expressed in a resolution of its Board of Directors. 4. CONVERSION. The holders of the Series A Preferred Stock shall have conversion rights as follows (the "CONVERSION RIGHTS"): (a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share and on or prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with 5 respect to the Series A Preferred Stock, at the office of the corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Series A Issue Price by the Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial "CONVERSION PRICE" per share for shares of Series A Preferred Stock shall be the Original Series A Issue Price; provided, however, that the Conversion Price for the Series A Preferred Stock shall be subject to adjustment as set forth in subsection 4(d). (b) AUTOMATIC CONVERSION. Each share of Series A Preferred Stock shall automatically be converted into shares of Common Stock at the Conversion Price at the time in effect for such Series A Preferred Stock immediately upon the earlier (i) the corporation's sale of its Common Stock generating gross proceeds of not less than $25,000,000, including, but not limited to, the exercise of rights to purchase common stock, (ii) the sale of all or substantially all of the assets or capital stock, or a merger or consolidation of the corporation with any other corporation or entity, for an aggregate consideration of at least $25,000,000, or (iii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A Preferred Stock. (c) MECHANICS OF CONVERSION. Before any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of the corporation or of any transfer agent for the Series A Preferred Stock, and shall give written notice to the corporation at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. The corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Series A Preferred Stock, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act of 1933, the conversion may, at the option of any holder tendering Series A Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Series A Preferred Stock shall not be deemed to have converted such Series A Preferred Stock until immediately prior to the closing of such sale of securities. (d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price of the Series A Preferred Stock shall be subject to adjustment from time to time as follows: (i)(A) If the corporation shall issue after the date upon which any shares of Series A Preferred Stock were first issued (the "PURCHASE DATE"), any Additional Stock (as defined below) without consideration 6 or for a consideration per share less than the Conversion Price for the Series A Preferred Stock in effect immediately prior to the issuance of such Additional Stock, the Conversion Price for the Series A Preferred Stock in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this clause (i)) be adjusted to a price determined by multiplying such Conversion Price then in effect by a fraction (x) the numerator of which shall be the number of shares of Common Stock outstanding (or deemed to be outstanding) immediately prior to such issuance or sale plus the number of shares of Common Stock that the aggregate consideration received by the corporation for the total number of shares of Additional Stock so issued or sold (or deemed issued or sold) would purchase at the Conversion Price for the Series A Preferred Stock immediately prior to such issuance or sale, and (y) the denominator of which shall be the number of shares of Common Stock outstanding (or deemed to be outstanding) immediately prior to such issuance or sale plus the number of shares of such Additional Stock so issued or sold (or deemed issued or sold). (B) No adjustment of the Conversion Price for the Series A Preferred Stock shall be made in an amount less than one cent per share, provided that any adjustments which are not required to be made by reason of this sentence shall be carried forward and shall be either taken into account in any subsequent adjustment made prior to 3 years from the date of the event giving rise to the adjustment being carried forward, or shall be made at the end of 3 years from the date of the event giving rise to the adjustment being carried forward. Except to the limited extent provided for in subsections (E)(3) and (E)(4), no adjustment of such Conversion Price pursuant to this subsection 4(d)(i) shall have the effect of increasing the Conversion Price above the Conversion Price in effect immediately prior to such adjustment. (C) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any reasonable discounts, commissions or other expenses allowed, paid or incurred by the corporation for any underwriting or otherwise in connection with the issuance and sale thereof. (D) In the case of the issuance of the Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined in good faith by the Board of Directors irrespective of any accounting treatment. (E) In the case of the issuance (whether before, on or after the applicable Purchase Date) of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock or options to purchase or rights to subscribe for such convertible or exchangeable securities, the following provisions shall apply for all purposes of this subsection 4(d)(i) and subsection 4(d)(ii): (1) The aggregate maximum number of shares of Common Stock deliverable upon exercise (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential antidilution 7 adjustments) of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)), if any, received by the corporation upon the issuance of such options or rights plus the minimum exercise price provided in such options or rights (without taking into account potential antidilution adjustments) for the Common Stock covered thereby. (2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange (assuming the satisfaction of any conditions to convertibility or exchangeability, including, without limitation, the passage of time, but without taking into account potential antidilution adjustments) for any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the corporation for any such securities and related options or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the minimum additional consideration, if any, to be received by the corporation (without taking into account potential antidilution adjustments) upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subsections 4(d)(i)(C) and (d)(i)(D)). (3) In the event of any change in the number of shares of Common Stock deliverable or in the consideration payable to the corporation upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Conversion Price of the Series A Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities, shall be recomputed to reflect such change, but no further adjustment shall be made for the actual issuance of Common Stock or any payment of such consideration upon the exercise of any such options or rights or the conversion or exchange of such securities. (4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of the Series A Preferred Stock, to the extent in any way affected by or computed using such options, rights or securities or options or rights related to such securities, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and convertible or exchangeable securities which remain in effect) actually issued upon the exercise of such options or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities. 8 (5) The number of shares of Common Stock deemed issued and the consideration deemed paid therefor pursuant to subsections 4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change, termination or expiration of the type described in either subsection 4(d)(i)(E)(3) or (4). (ii) "ADDITIONAL STOCK" shall mean any shares of Common Stock issued (or deemed to have been issued pursuant to subsection 4(d)(i)(E)) by the corporation after the Purchase Date other than: (A) Common Stock issued pursuant to a transaction described in subsection 4(d)(iii) hereof; (B) Shares of Common Stock issuable or issued to employees of the corporation directly or pursuant to a stock option plan or restricted stock plan approved by the shareholders and Board of Directors of the corporation at any time when the total number of shares of Common Stock so issuable or issued (and not repurchased at cost by the corporation in connection with the termination of employment) does not exceed 2,800,000; (C) Shares of Common Stock issued or issuable (I) in a public offering before or in connection with which all outstanding shares of Series A Preferred Stock will be converted to Common Stock or (II) upon exercise of warrants or rights granted to underwriters in connection with such a public offering. (iii) In the event the corporation should at any time or from time to time after the Purchase Date fix a record date for the effectuation of a split or subdivision of the outstanding shares of Common Stock or the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly, additional shares of Common Stock (hereinafter referred to as "COMMON STOCK EQUIVALENTS") without payment of any consideration by such holder for the additional shares of Common Stock or the Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such dividend distribution, split or subdivision if no record date is fixed), the Conversion Price of the Series A Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase of the aggregate of shares of Common Stock outstanding and those issuable with respect to such Common Stock Equivalents with the number of shares issuable with respect to Common Stock Equivalents determined from time to time in the manner provided for deemed issuances in subsection 4(d)(i)(E). (iv) If the number of shares of Common Stock outstanding at any time after the Purchase Date is decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price for the Series A Preferred Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in outstanding shares. 9 (e) OTHER DISTRIBUTIONS. In the event the corporation shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the corporation or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 4(d)(iii), then, in each such case for the purpose of this subsection 4(e), the holders of the Series A Preferred Stock shall be entitled to a proportionate share of any such distribution as though they were the holders of the number of shares of Common Stock of the corporation into which their shares of Series A Preferred Stock are convertible as of the record date fixed for the determination of the holders of Common Stock of the corporation entitled to receive such distribution. (f) RECAPITALIZATIONS. (i) If at any time or from time to time there shall be a recapitalization of the Common Stock (other than a subdivision, combination or merger or sale of assets transaction provided for elsewhere in this Section 4 or Section 2) provision shall be made so that the holders of the Series A Preferred Stock shall thereafter be entitled to receive upon conversion of the Series A Preferred Stock the number of shares of stock or other securities or property of the Company or otherwise, to which a holder of Common Stock deliverable upon conversion would have been entitled on such recapitalization. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of the Series A Preferred Stock after the recapitalization to the end that the provisions of this Section 4 (including adjustment of the Conversion Price then in effect and the number of shares purchasable upon conversion of the Series A Preferred Stock) shall be applicable after that event as nearly equivalent as may be practicable. (ii) In the case of any consolidation or merger of the corporation with or into another corporation or the conveyance of all or substantially all of the assets of the corporation to another corporation, each share of Series A Preferred Stock shall thereafter be convertible into the number of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the corporation deliverable upon conversion of the Series A Preferred Stock would have been entitled upon such consolidation, merger or conveyance; and, in any such case, appropriate adjustment (as determined by the Board of Directors) shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth herein (including provisions with respect to changes in and other adjustments of the Conversion Price in effect) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or any other property thereafter deliverable upon the conversion of the Series A Preferred Stock. (g) NO IMPAIRMENT. The corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the corporation, but will at all times in good faith assist in the 10 carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Series A Preferred Stock against impairment. (h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS. (i) No fractional shares shall be issued upon the conversion of any share or shares of the Series A Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion. (ii) Upon the occurrence of each adjustment or readjustment of the Conversion Price of Series A Preferred Stock pursuant to this Section 4, the corporation, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each holder of Series A Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The corporation shall, upon the written request at any time of any holder of Series A Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Conversion Price for the Series A Preferred Stock at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of a share of Series A Preferred Stock. (i) NOTICES OF RECORD DATE. In the event of any taking by the corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend) or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, the corporation shall mail to each holder of Series A Preferred Stock, at least 20 days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. (j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, in addition to such other remedies as shall be available to the holder of such Preferred Stock, the corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as 11 shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to this Certificate of Designation. (k) NOTICES. Any notice required by the provisions of this Section 4 to be given to the holders of shares of Series A Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of the corporation. 5. VOTING RIGHTS. The holder of each share of Series A Preferred Stock shall have the right to one vote for each share of Common Stock into which such Series A Preferred Stock could then be converted. With respect to any vote, each holder of Series A Preferred Stock shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders' meeting in accordance with the bylaws of the corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). 6. PROTECTIVE PROVISIONS. So long as not less than 20 percent of the Series A Preferred Stock originally issued is still outstanding, the corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least a majority of the then outstanding shares of Series A Preferred Stock: (a) alter or change the rights, preferences or privileges of the shares of Series A Preferred Stock so as to affect adversely the shares of Series A Preferred Stock; (b) increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Preferred Stock; (c) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security having a preference over, or being on a parity with, the Series A Preferred Stock with respect to voting, dividends or upon liquidation, or having rights similar to any of the rights of the Series A Preferred Stock under this Section 6; or (d) amend the corporation's Certificate of Incorporation or bylaws or this Certificate of Designation. 7. STATUS OF CONVERTED OR REDEEMED STOCK. In the event any shares of Series A Preferred Stock shall be redeemed or converted pursuant to Section 3 or Section 4 hereof, the shares so converted or redeemed shall be canceled and shall not be issuable by the corporation. The Certificate of Incorporation of 12 the corporation shall be appropriately amended to effect the corresponding reduction in the corporation's authorized capital stock. IN WITNESS WHEREOF, TopTeam, Inc. has caused this Certificate of designation to be signed by its Chairman and attested to by its Assistant Secretary as of this 9th day of November, 1999. TOPTEAM, INC. By: /s/ ROBERT WALLACE ------------------------------------------------------ Robert Wallace, Chairman of the Board of Directors ATTEST: /s/ BRIAN BURNS - ---------------------- Brian Burns, Secretary 13 EX-8.C 9 EXHIBIT (C)(VIII) THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL FOR THE COMPANY THAT THE PROPOSED TRANSACTION WILL BE EXEMPT FROM SUCH REGISTRATION. PROMISSORY NOTE November __, 1999 $1,000,000.00 San Jose, California For value received, TOPTEAM, INC., a Delaware corporation ("Maker"), promises to pay to the order of EMARKETPLACE, INC., a Delaware corporation ("Payee"), at 255 West Julian Street, Suite 100, San Jose, California 95110, or at such other location as Payee may from time to time designate, the principal sum of One Million and no/100 Dollars ($1,000,000.00), or so much thereof as shall be outstanding from time to time, together with interest thereon from the date hereof until this Note has been paid in full on the terms and conditions contained herein. 1. Interest shall be computed, and principal and interest shall be due and payable, as follows: (a) Interest shall accrue on the outstanding principal balance hereunder at a per annum rate equal to the lesser of (i) seven percent and (ii) the highest annual rate which may lawfully be charged and collected under applicable law on the obligations evidenced by this Note. Interest hereunder shall be computed on the basis of a 365-day year and actual days elapsed. (b) Installments of interest shall be payable on the first day of each month during the term of this Note. (c) The entire unpaid principal balance, together with all accrued and unpaid interest, shall be due and payable on the second anniversary of the date of this Note (the "Maturity Date"). All accrued and unpaid interest shall be due and payable on the Maturity Date. 2. All payments shall be applied first to interest on the outstanding principal balance at the interest rate stated in this Note and any balance shall then be applied to reduction of principal, and interest shall thereafter cease on the principal so paid. Principal and interest shall be payable in lawful money of the United States. 3. Maker shall have the right to prepay this Note, at any time, in whole or in part, at a prepayment price equal to the principal being prepaid plus accrued interest thereon, without any premium or penalty. This Note shall be subject to mandatory prepayment in whole at a prepayment price equal to the outstanding principal of this Note plus accrued interest thereon, without any premium or penalty, on the date of closing of an initial public offering of the Common Stock pursuant to a registration statement under the Securities Act of 1933 in a transaction that generates gross proceeds of not less than $25,000,000. 4. The occurrence of any of the following shall constitute an "Event of Default" hereunder: (a) Default in the payment of any installment of interest or principal on this Note when due or in the performance of any other obligation of Maker hereunder pursuant to the terms hereof. (b) The filing by Debtor of any petition for relief under any applicable bankruptcy or insolvency law. Upon the occurrence of any such Event of Default, then in addition to all other rights and remedies set forth herein, or at law or in equity, the entire unpaid balance of principal on this Note, together with all accrued interest thereon may be declared by Payee to be immediately due and payable without notice to Maker. 5. If this Note is not paid when due or if an Event of Default occurs, Maker promises to pay all costs of collection, including, but not limited to, reasonable attorneys' fees incurred by Payee on account of such collection, whether or not suit is filed hereon. 6. Except as expressly provided herein, Maker waives presentment, demand, notice, protest and all other demands or notices in connection with the delivery, acceptance, endorsement, performance, default, or enforcement of this Note, assents to any and all extensions or postponements of the time of payment or any other indulgence, to any substitution, exchange, or release of security, or to the addition or release of any other party or person primarily or secondarily liable. 7. This Note shall be governed by and construed in accordance with the laws of the State of California. 8. Reference in this Note to "Payee" shall mean the original Payee hereunder so long as such payee shall be the Payee of this Note and thereafter shall mean any subsequent Payee of this Note. 9. Time is of the essence of each obligation of Maker hereunder. 10. No delay or omission on the part of Payee in exercising any rights hereunder, or any other instrument given to secure this Note, whether before or after a default or Event of Default hereunder or under said instruments, shall operate as a waiver of such right or default or Event of -2- Default or of any other right hereunder or under said instruments, and the acceptance at any time by Payee of any past-due amounts shall not be deemed to be a waiver of the right to require prompt payment when due of any other amounts then or thereafter due and payable hereunder or thereunder. 11. In the event that any provision of this Note shall become declared inoperable by any Court or become inoperable as a result of any law or ruling hereafter adopted by any governmental authority, the remainder of its terms shall remain in full force and effect and modification of the terms hereof required by law shall apply as though the same were an original term or condition hereof. 12. The remedies of Payee as provided herein or at law or in equity, shall be cumulative and concurrent, and may be pursued singly, successively, or together at the sole discretion of Payee. 13. Maker may not assign its duties and obligations under this Note without the prior written consent of Payee, which consent may be given or denied in Payee's sole and absolute discretion. Payee may not assign its rights, duties and obligations under this Note to any person or entity, other than an affiliate of Payee, without the prior written consent of Maker, which consent may be given or denied in Maker's sole and absolute discretion. MAKER: TOPTEAM, INC. By: /s/ ROBERT WALLACE --------------------------------------- Robert Wallace, Chairman -3- EX-9.C 10 EXHIBIT (C)(IX) EMPLOYMENT AGREEMENT The effective date of this Agreement by and between TOPTEAM, INC. a Delaware corporation (the "Company"), and FRED H. WALTI, II (the "Officer") shall be the closing date of the roll-up transaction by and between Full Moon Interactive Group, Inc. and TopTeam, Inc. WITNESSETH WHEREAS, the Company desires to employ Officer, and Officer desires to accept such employment with the Company upon the terms and conditions set forth herein, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Officer agree as follows: AGREEMENT 1. EMPLOYMENT AND DUTIES. The Company hereby employs Officer as President and Chief Executive Officer and Officer hereby accepts employment by the Company upon the terms and conditions set forth herein, with the authority and responsibilities customarily afforded the principal executive of a company. Officer shall faithfully and diligently develop and direct all aspects of the Company's business plan and reporting requirements that the Company's Board of Directors may adopt, in accordance with the Company's bylaws, and do and perform all acts in the ordinary course of the Company's business (with such limits as the Board of Directors of the Company may prescribe) necessary and conducive to the Company's best interests. All other officers of the Company shall report to Officer, and Officer shall have authority, among other things, to hire and terminate employees. Officer shall devote full time, energy, and skill to the business of the Company and to the promotion of the Company's best interests, except for vacations and absences made necessary because of illness or personal matters. Officer shall report directly to the Board of Directors. The primary place of employment shall be at the Company's principal offices in Los Angeles, California. 2. TERM. The term of this Agreement shall commence as of the closing date of the roll-up transaction between the Company and Full Moon Interactive Group, Inc. and shall expire five years hence, unless sooner terminated as hereinafter set forth (the "Term"). This Agreement will renew for an additional two years unless the Company's Board of Directors advises Officer in writing of its intent not to renew six (6) months prior to the expiration of the Term. 3. COMPENSATION. Subject to the provisions of Paragraphs 4 and 5 of this Agreement, the Company shall pay Officer for all services to be performed by Officer during the Term of this Agreement the following compensation: (a) BASE SALARY. The Company shall pay Officer a base salary at the rate of no less than $170,000 per annum ("Base Salary"), payable in periodic payments in accordance with the Company's practices for other executive, managerial, and supervisory employees, as such practices may be determined from time to time. The Company's Board of Directors will review such Base Salary annually and, in its discretion, may grant increases thereof based upon Officer's performance; (b) ANNUAL CASH BONUS. The Officer shall be entitled to receive an Annual Cash Performance Bonus of up to 50% of his then current gross annual salary upon the achievement of reasonable corporate performance targets established by the Board of Directors ("Annual Cash Performance Bonus"). For the initial year, the Board of Directors shall provide in writing to the Officer specific performance targets prior to the effective date of this Agreement. In subsequent years and no later than sixty (60) days following the Company's fiscal year end, the Annual Cash Performance Bonus will be established in writing by the Board at an amount no less than the initial Annual Cash Performance Bonus, provided the corresponding performance targets are achieved; (c) STOCK OPTIONS. Upon the execution of this Agreement, the Company shall grant Officer an option pursuant to the Company's 1999 Stock Plan (a copy of which is attached hereto as Exhibit A) to purchase a total of 250,000 shares of common stock at an exercise price of $7.50 per share with 50,000 shares being immediately exercisable upon execution of this Agreement and the remaining amounts becoming exercisable in four (4) equal, annual installment amounts on the anniversary date hereof. In the event of a Change of Control as the term is defined in Paragraph 4 or an Involuntary Termination, all of Officer's unvested options will accelerate and become immediately exercisable. A copy of the form of option agreement containing the terms and conditions of the stock options granted hereunder is attached hereto as Exhibit B. (d) WITHHOLDING. All such payments will be subject to such deductions as may be required to be made pursuant to law, government regulations, or order, or by agreement with, or consent of, the Officer; (e) BENEFITS. Officer shall be entitled to participate in such life insurance, medical, dental, long-term disability, pension, and retirement plans, and other programs as may be approved from time to time by the Company for the benefit of its officers. Officer also shall be entitled to no less than three weeks of vacation with pay during each consecutive 12-month period during the term of Officer's employment hereunder, to be taken at such times and in such periods as Officer and the Company shall mutually determine and provided that no vacation time shall interfere with the duties required to be rendered by Officer hereunder; and 2 (f) BUSINESS EXPENSES. The Company agrees that during the term of this Agreement Officer shall be entitled to reimbursement by the Company for all reasonable expenses actually and necessarily incurred by Officer on the Company's behalf in the course of Officer's employment hereunder, for which Officer shall submit substantiation in a form satisfactory to the Company and which are approved by the Company in its reasonable discretion. 4. TERMINATION. (a) Officer's employment with the Company may be terminated, subject to the notification provisions set forth in Paragraph 4(b) below, as follows: (i) Termination for Cause, which means (1) Officer willfully and unreasonably refuses to perform services hereunder; (2) Officer materially breaches Paragraph 6 of this Agreement; (3) Officer engages in acts of dishonesty or fraud in connection with the services performed hereunder that have a material adverse effect on the Company; or (4) Officer engages in other serious misconduct of such a nature that the continued employment of Officer may, in the reasonable discretion of the Board of Directors, be expected to materially and adversely affect the business or properties of the Company, including acts which violate securities laws, misrepresentation of material facts to the Board or the shareholders, or criminal acts. (ii) Involuntary Termination, which is defined as termination by the Company of Officer's employment, other than in a Termination for Cause, Voluntary Termination, a discontinuation of employment in accordance with Paragraph 5 or due to death or retirement on or after age 65. Involuntary Termination as defined herein shall include a termination by Officer for Good Reason; or (iii) Voluntary Termination, which means termination by Officer of Officer's employment by the Company. (b) TERMINATION PAYMENTS. In the event of Officer's termination, severance payments ("Severance Amount Payments") shall be made as follows: (i) TERMINATION FOR CAUSE. If Officer's employment with the Company is Terminated for Cause, all accrued salary and vacation as of the date of Termination for Cause, shall be paid to Officer. If the Company determines that a reason constituting cause for termination under clauses 4(a)(i)(1)-(4) has occurred, it shall give Officer written notice thereof at least 30 days prior to the proposed date of termination of employment. If Officer undertakes the necessary steps to remedy the condition constituting cause within 30 days after the receipt of such notice, then a 3 reason for termination for cause shall be deemed not to have occurred. If Officer shall not remedy the condition constituting cause within such time period, then Termination for Cause shall occur on the date set forth in the notice from the Company. (ii) VOLUNTARY TERMINATION. In the event of Voluntary Termination during the term of Officer's employment hereunder, Officer shall immediately be paid all accrued salary and vacation pay as of the date of termination, but no other compensation or reimbursement of any kind, including without limitation, severance compensation. (iii) INVOLUNTARY TERMINATION. In the event of an Involuntary Termination including death or retirement on or after age 65, during the term of Officer's employment hereunder and except as provided in Paragraph 5, the Company shall pay the Officer, or a designated beneficiary in the event of Officer's death, or if none, to Officer's then living spouse, or if none, to the duly appointed personal representative of Officer's estate, an amount equal to: 1) the then current Base Salary for the duration of the Term set forth in Paragraph 3(a) herein on the effective date of the termination, but in no event, less than an amount equal to two years of the then current Base Salary, plus 2) all accrued salary and vacation pay 3) the then maximum Annual Cash Performance Bonus for the then current fiscal year set in accordance with Paragraph 3(b) 4) and benefits for the later of the duration of the Term and two years from the date of termination If the Officer determines that a reason constituting termination for Good Reason as defined in Paragraph 4(c) below has occurred, he shall provide the Company written notice thereof at least 30 days prior to the proposed date of termination of employment. If the Company shall take the necessary steps to remedy the condition constituting Good Reason(s) for termination within 30 days after the receipt of such notice, then a reason for termination for Good Reason shall be deemed not to have occurred. If the Company shall not remedy the condition constituting Good Reason within such time period, then Termination for Good Reason shall occur on the date set forth in the notice from the Officer. (c) DEFINITIONS. All the terms defined in this paragraph 4 shall have the meanings given below throughout this Agreement: (i) a "CHANGE OF CONTROL" shall be deemed to have occurred if: a) a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing 50 percent or more of the combined voting power of the Company's then outstanding voting securities; or 4 b) the Company transfers substantially all of its assets to another corporation which is not a wholly-owned subsidiary of the Company. (ii) a "GOOD REASON" shall mean: c) the assignment of Officer to any duties inconsistent with, or any adverse change in, Officer's titles or positions, duties, responsibilities or status with the Company, or the removal of Officer from, or failure to reelect Officer to, any of such positions: or d) the failure of the Company to provide support, information, assistance and staffing reasonably appropriate for Officer to carry out Officer's duties or to achieve the performance goals set by the Company; or e) any other material breach by the Company of this Agreement which is not cured within thirty (30) days of notice thereof by the Officer to the Company; or f) during the initial year of this Agreement, the failure of the Company to obtain Officer's consent in writing to the nomination of the Company's Chairman of the Board other than Robert M. Wallace; or g) Officer is not elected to the Company's Board of Directors; or h) a change in the location of the Officer's principal place of employment, which shall be designated and operated as the Company's executive offices, by the Company by more than thirty miles from the location where the Officer was principally employed immediately prior to the effective date of this Agreement. (d) CERTAIN PAYMENT REDUCTIONS: (i) For purposes of this subparagraph (d), (i) a Payment shall mean any payment or distribution in the nature of compensation to or for the benefit of Officer, whether paid or payable pursuant to this Agreement or otherwise; (ii) Agreement Payment shall mean a Payment paid or payable pursuant to this Agreement (determined without regard to this subparagraph (d)); (iii) Net After Tax Receipt shall mean the Present Value of a Payment net of all taxes imposed on Officer with respect thereto under Sections 1 and 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), determined by applying the highest marginal rate under Sections 1 of the Code which applied to the taxable income of Officer for the immediately preceding taxable year; (iv) "Present Value" shall mean such value determined in accordance with Section 280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the smallest aggregate amount of Payments which (a) is less than the sum of all Payments (determined without regard to this subparagraph (d)) and (b) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the aggregate Payments were equal to the sum of all Payments (determined without regard to this subparagraph (d)) or any other amount less than the sum of all payments (determined without regard to this subparagraph (d)). 5 (ii) Anything in this Agreement to the contrary notwithstanding, in the event the Company's independent public accounts (the "Accounting Firm") shall determine that receipt of all Payments would subject Officer to tax under Section 4999 of the Code, it shall determine whether some amount of Payments would meet the definition of a "Reduced Amount." If the Accounting Firm determines that there is a Reduced Amount, the aggregate Agreement Payments shall be reduced to such Reduced Amount; provided, however, that if the Reduced Amount exceeds the aggregate Agreement Payments, the aggregate Payments shall, after the reduction of all Agreement Payments, be reduced (but not below zero) in the amount of such excess. (iii) If the Accounting Firm determines that aggregate Agreement Payments or Payments, as the case may be, should be reduced to the Reduced Amount, the Company shall promptly give notice to Officer to that effect and a copy of the detailed calculation thereof, and Officer may then elect, in Officer's sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the present value of the aggregate Payments equals the Reduced Amount), and Officer shall advise the Company in writing of Officer's election within ten days of Officer's receipt of notice. If no such election is made by Officer within such ten-day period, the Company may elect which of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced (as long as after such election the present value of the aggregate Agreement Payments or Payments, as the case may be, equals the Reduced Amount) and shall notify Officer promptly of such election. All determinations made by the Accounting Firm under this Paragraph 4(d) shall be binding upon the Company and Officer and shall be made within 60 days after a termination of Officer's employment. As promptly as practicable following such determination, the Company shall pay to or distribute for Officer's benefit such Payments as are then due to Officer under this Agreement and shall promptly pay to or distribute for Officer's benefit in the future such Payments as become due to Officer under this Agreement. (iv) While it is the intention of the Company and Officer to reduce the amounts payable or distributable to Officer hereunder only if the aggregate Net After Tax Receipts to Officer would thereby be increased, as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for Officer's benefit pursuant to this Agreement which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by the Company to or for Officer's benefit pursuant to this Agreement could have been so paid or distributed ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service 6 against the Company or Officer which the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for Officer's benefit shall be treated for all purposes as a loan AB INITIO to Officer which Officer shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by Officer to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which Officer is subject to tax under Section 1and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for Officer's benefit together with interest at the applicable federal rate provided for under Section 7872(f)(2) of the Code. (v) The Company will bear the fees and expenses of the Accounting Firm in making the determinations required by the Paragraph 4(d). 5. DISABILITY. In the event that Officer is permanently disabled so as to be unable to fully perform the services required hereunder, Officer's obligation to perform such services will terminate and the Company may terminate this Agreement upon five days' written notice to Officer. In the event of such termination, Officer's Base Salary as defined in Paragraph 3 (a) hereof and benefits as defined in Paragraph 3 (e) hereof shall continue during the then remaining Term of this Agreement, reduced by any payments received by Officer during such term under a long-term disability plan or policy maintained by the Company. For purposes hereof, "Disability" shall mean that by reason of physical or mental disability, officer will be unable to perform substantially the duties of employment under this Agreement for a period of 180 consecutive days. 6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Officer acknowledges that the Company may disclose certain confidential information to Officer during the term of this Agreement to enable Officer to perform the duties required hereunder. Officer hereby covenants and agrees that he will not, without the prior written consent of the Company, during the term of this Agreement or for a two year period thereafter, knowingly disclose or permit to be disclosed to any third party by any method whatsoever any of the confidential information of the Company. For purposes of this Agreement, "Confidential Information" shall include, but not be limited to, any and all records, notes, memoranda, data, ideas, processes, methods, techniques, systems, formulas, patents, models, devices, programs, computer software, writings, research, personnel information, customer information, the Company's financial information, plans, or any other information of whatever nature in the possession or control of the Company which has not been published or disclosed 7 to the general public, or which gives to the Company an opportunity to obtain an advantage over competitors who do not know of or use it. Confidential Information will not, however, include information that Officer can establish: (a) was already known to the Officer at the time it was disclosed through no wrongful act of the Officer; (b) has become publicly known through no wrongful act of the Officer; (c) has been rightfully received from a third party without restriction on disclosure and without breach of an obligation of confidentiality; or (d) has been independently developed by the Officer without reference to the Confidential Information. Officer further agrees that if Officer's employment hereunder is terminated for any reason, he will leave with the Company and will not take originals or copies of any records, papers, programs, computer software, and documents or any matter of whatever nature that bears secret or Confidential Information of the Company. The foregoing paragraph shall not be applicable if and to the extent Officer is required to testify in a judicial or regulatory proceeding pursuant to an order of a judge or administrative law judge. Officer hereby does assign, to the Company, its parent, subsidiary, successors, assigns, and nominees, all inventions, discoveries, improvements, copyrightable material, trademarks, programs, computer software, and ideas concerning the same, capable of use in connection with the business of the Company, which Officer may make or conceive, either solely or jointly with others, during the period of Employment by the Company, its parent, subsidiaries, or successors. Officer agrees, without charge to the Company and at the Company's expense, to execute, acknowledge, and deliver to the Company all such papers, including applications for patents, applications for copyright and trademark registrations, and assignments thereof, as may be necessary, and at all times to assist the Company, its parent, subsidiaries, successors, assigns, and nominees in every proper way to patent or register said programs, computer software, ideas, inventions, discoveries, improvements, copyrightable material, or trademarks in any and all countries and to vest title thereto in the Company, its parent, subsidiaries, successors, assigns, or nominees. Officer will report to the Company all discoveries, inventions, or improvements of whatever nature conceived or made by Officer at any time he was employed by the Company, its parent, subsidiaries, or successors. All such discoveries, inventions, and improvements which are applicable in any way to the Company's business shall be the sole and exclusive property of the Company. The covenants set forth in this paragraph which are made by Officer are in consideration of the employment or continuing employment of, and the compensation paid to, Officer during employment by the Company. The foregoing covenants will not prohibit Officer from disclosing confidential or other information to other employees of the Company or to third parties to the extent that such disclosure is necessary to the performance of the duties required under this Agreement. Any breach of this covenant of nondisclosure will result in the forfeiture by Officer and all other persons of any and all rights to severance pay and supplemental pension benefits unpaid at the time of breach and in such event the Company shall have no further obligation to pay any amount related thereto. This Agreement does not apply to any invention that qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which reads as follows: Section 2870. Inventions on Own Time--Exemption from Agreement 8 (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer. 7. ADDITIONAL REMEDIES. Officer recognizes that irreparable injury will result to the Company and to its business and properties in the event of any breach by Officer of any of the provisions of Paragraph 6 of this Agreement, and that Officer's continued employment is predicated on the commitments undertaken by Officer pursuant to said paragraph. In the event of any breach of any of Officer's commitments pursuant to Paragraph 6, the Company shall be entitled, in addition to any other remedies and damages available, to injunctive relief to restrain the violation of such commitments by Officer or by any person or persons acting for or with Officer in any capacity whatsoever. 8. NONASSIGNMENT. This Agreement is personal to Officer and shall not be assigned by him. Officer shall not hypothecate, delegate, encumber, alienate, transfer or otherwise dispose of his rights and duties hereunder. The Company may not assign this Agreement without Officer's consent to any other entity that, in connection with such assignment, acquires all or substantially all of the Company's assets or into or with which the Company is merged and consolidated. 9. WAIVER. The waiver of a breach of any provision of this Agreement by a party shall not be construed as a waiver of any subsequent breach by said party. 10. SEVERABILITY. If any clause, phrase, provision, or portion of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remained of this Agreement and shall not affect the application of any clause, provision, or portion hereof to other persons or circumstances. 9 11. ARBITRATION. (a) The terms of this Paragraph 11 contain the sole and exclusive method, means and procedure to resolve any and all claims, disputes or disagreements arising under this Agreement, except those arising under the provisions of Paragraph 6, above. Nothing in this Paragraph 11 shall prohibit a party from seeking and obtaining injunctive relief from a court of competent jurisdiction pending the outcome of arbitration. A party bringing an action for injunctive relief shall not be deemed to have waived his or its right to demand arbitration of all disputes. The parties irrevocably waive any and all rights to the contrary and shall at all times conduct themselves in accordance with the terms of this Paragraph 11; any attempt to circumvent the terms of this Paragraph 11 shall be null and void and of force or effect. (b) Either party desiring to arbitrate shall give written notice to the other party within a reasonable period of time after the party becomes aware of the need for arbitration. The arbitration shall be conducted in Los Angeles, California, in accordance with the National Rules of the American Arbitration Association ("AAA"), and shall be conducted by a single arbitrator selected from the approved AAA panel or by stipulation of the parties. In any arbitration hereunder, the parties shall be entitled to all rights of discovery provided for in the California Code of Civil Procedure for judicial proceedings. The arbitrator shall give effect to statutes of limitation in determining any claim. The decision of the arbitrator shall be final and binding. Judgment on any award rendered by such arbitrator shall be final and binding. Judgment on any award rendered by such arbitrator may be entered in any court having jurisdiction over the subject matter of the controversy. The prevailing party shall receive an award of costs and expenses related to the arbitration, including attorneys' fees. The fees and costs of the arbitrator and the cost of any record or transcript of the arbitration shall be borne by the losing party. Should Officer or the Company institute any legal action or administrative proceeding with respect to any claim waived by this agreement or pursue any dispute or matter covered by this paragraph by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses and attorneys' fees incurred as a result of such action. 12. RELEVANT LAW. This Agreement shall be construes and enforced in accordance with the laws of the State of California. 13. NOTICES. All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed as follows, or to such other address as shall have been designated in writing by the addressee: 10 (a) if to the Company: (b) if to the Officer: c/o eMarketplace, Inc. c/o Full Moon Interactive Group, Inc 255 West Julian Street 1111 Tamarind Avenue Suite 100 Hollywood, CA 90038 San Jose, CA 95110 Facsimile (323) 856-3011 Facsimile (408) 275-1958 14. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties and supersedes all prior agreements, arrangements, and communications, whether oral or written, pertaining to the subject matter hereof; and this Agreement shall not be modified or amended except by written agreement of the Company and Officer. 15. ATTORNEY'S FEES. If any action or proceeding is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover as an element of its cost, and not its damages, its reasonable attorneys' fees, costs and expenses. 16. HEADINGS. The subject heading of the paragraphs and subparagraphs of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above. EMPLOYER: TOPTEAM, INC. EMPLOYEE: FRED H. WALTI, II BY: /s/ ROBERT WALLACE BY: /s/ FRED H. WALTI, II ---------------------- -------------------------- OFFICER: Chairman DATE: DATE: EX-10.C 11 EXHIBIT (C)(X) EMPLOYMENT AGREEMENT The effective date of this Agreement by and between TOPTEAM, INC. a Delaware corporation (the "Company"), and ROBERT WILSON (the "Officer") shall be the effective date of the acquisition of Full Moon Interactive Group, Inc. by TopTeam, Inc. WITNESSETH WHEREAS, the Company desires to employ Officer, and Officer desires to accept such employment with the Company upon the terms and conditions set forth herein, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the Company and the Officer agree as follows: AGREEMENT 1. EMPLOYMENT AND DUTIES. The Company hereby employs Officer as Chief Financial Officer and Officer hereby accepts employment by the Company upon the terms and conditions set forth herein, with the authority and responsibilities customarily afforded the chief financial officer of a company. Officer shall faithfully and diligently manage and direct Company's financial and accounting activities, in accordance with the Company's bylaws, and do and perform all acts in the ordinary course of the Company's business (with such limits as the Board of Directors of the Company may prescribe) necessary and conducive to the Company's best interests. Officer shall devote full time, energy, and skill to the business of the Company and to the promotion of the Company's best interests, except for vacations and absences made necessary because of illness or personal matters. Officer shall report to the Board or a designated officer of the Company. The primary place of employment shall be at the Company's principal offices in Los Angeles, California. 2. TERM. The term of this Agreement shall commence as of the effective date of the roll-up transaction between the Company and Full Moon Interactive Group, Inc. and shall expire five years hence, unless sooner terminated as hereinafter set forth (the "Term"). This Agreement will renew for an additional two years if the Company's Board of Directors does not advise Officer in writing of its intent to renew six (6) months prior to the expiration of the Term. 3. COMPENSATION. Subject to the provisions of Paragraphs 4 and 5 of this Agreement, the Company shall pay Officer for all services to be performed by Officer during the Term of this Agreement the following compensation: (a) BASE SALARY. The Company shall pay Officer a base salary at the rate of no less than $125,000 per annum ("Base Salary"), payable in periodic payments in accordance with the Company's practices for other executive, managerial, and supervisory employees, as such practices may be determined from time to time. The Company's Board of Directors will review such Base Salary annually and, in its discretion, may grant increases thereof based upon Officer's performance; (b) ANNUAL CASH BONUS. The Officer shall be entitled to receive an Annual Cash Performance Bonus of up to 25% of his then current gross annual salary upon the achievement of reasonable corporate performance targets established by the Board of Directors ("Annual Cash Performance Bonus"). For the initial year, the Board of Directors shall provide in writing to the Officer specific performance targets prior to the effective date of this Agreement. In subsequent years and no later than sixty (60) days following the Company's fiscal year end, the Annual Cash Performance Bonus will be established in writing by the Board at an amount no less than the initial Annual Cash Performance Bonus, provided the corresponding performance targets are achieved; (c) STOCK OPTIONS. Upon the execution of this Agreement, the Company shall grant Officer an option pursuant to the Company's 1999 Stock Plan (a copy of which is attached hereto as Exhibit A) to purchase a total of 125,000 shares of common stock at an exercise price of $7.50 per share with 25,000 shares being immediately exercisable upon execution of this Agreement and the remaining amounts becoming exercisable in four (4) equal, annual installment amounts on the anniversary date hereof. In the event of a Change of Control as the term is defined in Paragraph 4 or an Involuntary Termination, all of Officer's unvested options will accelerate and become immediately exercisable. A copy of the form of option agreement containing the terms and conditions of the stock options granted hereunder is attached hereto as Exhibit B. (d) WITHHOLDING. All such payments will be subject to such deductions as may be required to be made pursuant to law, government regulations, or order, or by agreement with, or consent of, the Officer; (e) BENEFITS. Officer shall be entitled to participate in such life insurance, medical, dental, long-term disability, pension, and retirement plans, and other programs as may be approved from time to time by the Company for the benefit of its officers. Officer also shall be entitled to no less than three weeks of vacation with pay during each consecutive 12-month period during the term of Officer's employment hereunder, to be taken at such times and in such periods as Officer and the Company shall mutually determine and provided that no vacation time shall interfere with the duties required to be rendered by Officer hereunder; and 2 (f) BUSINESS EXPENSES. The Company agrees that during the term of this Agreement Officer shall be entitled to reimbursement by the Company for all reasonable expenses actually and necessarily incurred by Officer on the Company's behalf in the course of Officer's employment hereunder, for which Officer shall submit substantiation in a form satisfactory to the Company and which are approved by the Company in its reasonable discretion. 4. TERMINATION. (a) Officer's employment with the Company may be terminated, subject to the notification provisions set forth in Paragraph 4(b) below, as follows: (i) Termination for Cause, which means (1) Officer willfully and unreasonably refuses to perform services hereunder; (2) Officer materially breaches Paragraph 6 of this Agreement; (3) Officer engages in acts of dishonesty or fraud in connection with the services performed hereunder that have a material adverse effect on the Company; or (4) Officer engages in other serious misconduct of such a nature that the continued employment of Officer may, in the reasonable discretion of the Board of Directors, be expected to materially and adversely affect the business or properties of the Company, including acts which violate securities laws, misrepresentation of material facts to the Board or the shareholders, or criminal acts. (ii) Involuntary Termination, which is defined as termination by the Company of Officer's employment, other than in a Termination for Cause, Voluntary Termination, a discontinuation of employment in accordance with Paragraph 5 or due to death or retirement on or after age 65. Involuntary Termination as defined herein shall include a termination by Officer for Good Reason; or (iii) Voluntary Termination, which means termination by Officer of Officer's employment by the Company. (b) TERMINATION PAYMENTS. In the event of Officer's termination, severance payments ("Severance Amount Payments") shall be made as follows: (i) TERMINATION FOR CAUSE. If Officer's employment with the Company is Terminated for Cause, all accrued salary and vacation as of the date of Termination for Cause, shall be paid to Officer. If the Company determines that a reason constituting cause for termination under clauses 4(a)(i)(1)-(4) has occurred, it shall give Officer written notice thereof at least 30 days prior to the proposed date of termination of employment. If Officer undertakes the necessary steps to remedy the condition constituting cause within 30 days after the receipt of such notice, then a 3 reason for termination for cause shall be deemed not to have occurred. If Officer shall not remedy the condition constituting cause within such time period, then Termination for Cause shall occur on the date set forth in the notice from the Company. (ii) VOLUNTARY TERMINATION. In the event of Voluntary Termination during the term of Officer's employment hereunder, Officer shall immediately be paid all accrued salary and vacation pay as of the date of termination, but no other compensation or reimbursement of any kind, including without limitation, severance compensation. (iii) INVOLUNTARY TERMINATION. In the event of an Involuntary Termination including death or retirement on or after age 65, during the term of Officer's employment hereunder and except as provided in Paragraph 5, the Company shall pay the Officer, or a designated beneficiary in the event of Officer's death, or if none, to Officer's then living spouse, or if none, to the duly appointed personal representative of Officer's estate, an amount equal to: 1) the then current Base Salary for the duration of the Term set forth in Paragraph 3(a) herein on the effective date of the termination, but in no event, less than an amount equal to two years of the then current Base Salary, plus 2) all accrued salary and vacation pay 3) the then maximum Annual Cash Performance Bonus for the then current fiscal year set in accordance with Paragraph 3(b) 4) and benefits for the later of the duration of the Term and two years from the date of termination If the Officer determines that a reason constituting termination for Good Reason as defined in Paragraph 4(c) below has occurred, he shall provide the Company written notice thereof at least 30 days prior to the proposed date of termination of employment. If the Company shall take the necessary steps to remedy the condition constituting Good Reason(s) for termination within 30 days after the receipt of such notice, then a reason for termination for Good Reason shall be deemed not to have occurred. If the Company shall not remedy the condition constituting Good Reason within such time period, then Termination for Good Reason shall occur on the date set forth in the notice from the Officer. (c) DEFINITIONS. All the terms defined in this paragraph 4 shall have the meanings given below throughout this Agreement: (i) a "CHANGE OF CONTROL" shall be deemed to have occurred if: a) a tender offer or exchange offer is made and consummated for the ownership of securities of the Company representing 50 percent or more of the combined voting power of the Company's then outstanding voting securities; or 4 b) the Company transfers substantially all of its assets to another corporation which is not a wholly-owned subsidiary of the Company. (ii) a "GOOD REASON" shall mean: a) the assignment of Officer to any duties inconsistent with, or any adverse change in, Officer's titles or positions, duties, responsibilities or status with the Company, or the removal of Officer from, or failure to reelect Officer to, any of such positions: or b) the failure of the Company to provide support, information, assistance and staffing reasonably appropriate for Officer to carry out Officer's duties or to achieve the performance goals set by the Company; or c) any other material breach by the Company of this Agreement which is not cured within thirty (30) days of notice thereof by the Officer to the Company; or d) a change in the location of the Officer's principal place of employment, which shall be designated and operated as the Company's executive offices, by the Company by more than thirty miles from the location where the Officer was principally employed immediately prior to the effective date of this Agreement. (d) CERTAIN PAYMENT REDUCTIONS: (i) For purposes of this subparagraph (d), (i) a Payment shall mean any payment or distribution in the nature of compensation to or for the benefit of Officer, whether paid or payable pursuant to this Agreement or otherwise; (ii) Agreement Payment shall mean a Payment paid or payable pursuant to this Agreement (determined without regard to this subparagraph (d)); (iii) Net After Tax Receipt shall mean the Present Value of a Payment net of all taxes imposed on Officer with respect thereto under Sections 1 and 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), determined by applying the highest marginal rate under Sections 1 of the Code which applied to the taxable income of Officer for the immediately preceding taxable year; (iv) "Present Value" shall mean such value determined in accordance with Section 280G(d)(4) of the Code; and (v) "Reduced Amount" shall mean the smallest aggregate amount of Payments which (a) is less than the sum of all Payments (determined without regard to this subparagraph (d)) and (b) results in aggregate Net After Tax Receipts which are equal to or greater than the Net After Tax Receipts which would result if the aggregate Payments were equal to the sum of all Payments (determined without regard to this subparagraph (d)) or any other amount less than the sum of all payments (determined without regard to this subparagraph (d)). (ii) Anything in this Agreement to the contrary notwithstanding, in the event the Company's independent public accounts (the "Accounting Firm") shall determine that receipt of all Payments would subject Officer to tax under Section 4999 of 5 the Code, it shall determine whether some amount of Payments would meet the definition of a "Reduced Amount." If the Accounting Firm determines that there is a Reduced Amount, the aggregate Agreement Payments shall be reduced to such Reduced Amount; provided, however, that if the Reduced Amount exceeds the aggregate Agreement Payments, the aggregate Payments shall, after the reduction of all Agreement Payments, be reduced (but not below zero) in the amount of such excess. (iii) If the Accounting Firm determines that aggregate Agreement Payments or Payments, as the case may be, should be reduced to the Reduced Amount, the Company shall promptly give notice to Officer to that effect and a copy of the detailed calculation thereof, and Officer may then elect, in Officer's sole discretion, which and how much of the Payments shall be eliminated or reduced (as long as after such election the present value of the aggregate Payments equals the Reduced Amount), and Officer shall advise the Company in writing of Officer's election within ten days of Officer's receipt of notice. If no such election is made by Officer within such ten-day period, the Company may elect which of the Agreement Payments or Payments, as the case may be, shall be eliminated or reduced (as long as after such election the present value of the aggregate Agreement Payments or Payments, as the case may be, equals the Reduced Amount) and shall notify Officer promptly of such election. All determinations made by the Accounting Firm under this Paragraph 4(d) shall be binding upon the Company and Officer and shall be made within 60 days after a termination of Officer's employment. As promptly as practicable following such determination, the Company shall pay to or distribute for Officer's benefit such Payments as are then due to Officer under this Agreement and shall promptly pay to or distribute for Officer's benefit in the future such Payments as become due to Officer under this Agreement. (iv) While it is the intention of the Company and Officer to reduce the amounts payable or distributable to Officer hereunder only if the aggregate Net After Tax Receipts to Officer would thereby be increased, as a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that amounts will have been paid or distributed by the Company to or for Officer's benefit pursuant to this Agreement which should not have been so paid or distributed ("Overpayment") or that additional amounts which will have not been paid or distributed by the Company to or for Officer's benefit pursuant to this Agreement could have been so paid or distributed ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the Accounting Firm, based either upon the assertion of a deficiency by the Internal Revenue Service against the Company or Officer which the Accounting Firm believes has a high probability of success or controlling precedent or other substantial authority, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for Officer's benefit shall be treated for all purposes as a loan AB INITIO to Officer which Officer shall repay to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no such loan shall be deemed to have been made and no amount shall be payable by Officer to the Company if and to the extent such deemed loan and payment would not either reduce the amount on which Officer is subject to tax under Section 1and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for Officer's benefit together with interest at the applicable federal rate provided for under Section 7872(f)(2) of the Code. 6 (v) The Company will bear the fees and expenses of the Accounting Firm in making the determinations required by the Paragraph 4(d). 5. DISABILITY. In the event that Officer is permanently disabled so as to be unable to fully perform the services required hereunder, Officer's obligation to perform such services will terminate and the Company may terminate this Agreement upon five days' written notice to Officer. In the event of such termination, Officer's Base Salary as defined in Paragraph 3 (a) hereof and benefits as defined in Paragraph 3 (e) hereof shall continue during the then remaining Term of this Agreement, reduced by any payments received by Officer during such term under a long-term disability plan or policy maintained by the Company. For purposes hereof, "Disability" shall mean that by reason of physical or mental disability, officer will be unable to perform substantially the duties of employment under this Agreement for a period of 180 consecutive days. 6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Officer acknowledges that the Company may disclose certain confidential information to Officer during the term of this Agreement to enable Officer to perform the duties required hereunder. Officer hereby covenants and agrees that he will not, without the prior written consent of the Company, during the term of this Agreement or for a two year period thereafter, knowingly disclose or permit to be disclosed to any third party by any method whatsoever any of the confidential information of the Company. For purposes of this Agreement, "Confidential Information" shall include, but not be limited to, any and all records, notes, memoranda, data, ideas, processes, methods, techniques, systems, formulas, patents, models, devices, programs, computer software, writings, research, personnel information, customer information, the Company's financial information, plans, or any other information of whatever nature in the possession or control of the Company which has not been published or disclosed to the general public, or which gives to the Company an opportunity to obtain an advantage over competitors who do not know of or use it. Confidential Information will not, however, include information that Officer can establish: (a) was already known to the Officer at the time it was disclosed through no wrongful act of the Officer; (b) has become publicly known through no wrongful 7 act of the Officer; (c) has been rightfully received from a third party without restriction on disclosure and without breach of an obligation of confidentiality; or (d) has been independently developed by the Officer without reference to the Confidential Information. Officer further agrees that if Officer's employment hereunder is terminated for any reason, he will leave with the Company and will not take originals or copies of any records, papers, programs, computer software, and documents or any matter of whatever nature that bears secret or Confidential Information of the Company. The foregoing paragraph shall not be applicable if and to the extent Officer is required to testify in a judicial or regulatory proceeding pursuant to an order of a judge or administrative law judge. Officer hereby does assign, to the Company, its parent, subsidiary, successors, assigns, and nominees, all inventions, discoveries, improvements, copyrightable material, trademarks, programs, computer software, and ideas concerning the same, capable of use in connection with the business of the Company, which Officer may make or conceive, either solely or jointly with others, during the period of Employment by the Company, its parent, subsidiaries, or successors. Officer agrees, without charge to the Company and at the Company's expense, to execute, acknowledge, and deliver to the Company all such papers, including applications for patents, applications for copyright and trademark registrations, and assignments thereof, as may be necessary, and at all times to assist the Company, its parent, subsidiaries, successors, assigns, and nominees in every proper way to patent or register said programs, computer software, ideas, inventions, discoveries, improvements, copyrightable material, or trademarks in any and all countries and to vest title thereto in the Company, its parent, subsidiaries, successors, assigns, or nominees. Officer will report to the Company all discoveries, inventions, or improvements of whatever nature conceived or made by Officer at any time he was employed by the Company, its parent, subsidiaries, or successors. All such discoveries, inventions, and improvements which are applicable in any way to the Company's business shall be the sole and exclusive property of the Company. The covenants set forth in this paragraph which are made by Officer are in consideration of the employment or continuing employment of, and the compensation paid to, Officer during employment by the Company. The foregoing covenants will not prohibit Officer from disclosing confidential or other information to other employees of the Company or to third parties to the extent that such disclosure is necessary to the performance of the duties required under this Agreement. Any breach of this covenant of nondisclosure will result in the forfeiture by Officer and all other persons of any and all rights to severance pay and supplemental pension benefits unpaid at the time of breach and in such event the Company shall have no further obligation to pay any amount related thereto. This Agreement does not apply to any invention that qualifies fully under the provisions of Section 2870(a) of the California Labor Code, which reads as follows: Section 2870. Inventions on Own Time--Exemption from Agreement (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's 8 equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer. 7. ADDITIONAL REMEDIES. Officer recognizes that irreparable injury will result to the Company and to its business and properties in the event of any breach by Officer of any of the provisions of Paragraph 6 of this Agreement, and that Officer's continued employment is predicated on the commitments undertaken by Officer pursuant to said paragraph. In the event of any breach of any of Officer's commitments pursuant to Paragraph 6, the Company shall be entitled, in addition to any other remedies and damages available, to injunctive relief to restrain the violation of such commitments by Officer or by any person or persons acting for or with Officer in any capacity whatsoever. 8. NONASSIGNMENT. This Agreement is personal to Officer and shall not be assigned by him. Officer shall not hypothecate, delegate, encumber, alienate, transfer or otherwise dispose of his rights and duties hereunder. The Company may not assign this Agreement without Officer's consent to any other entity that, in connection with such assignment, acquires all or substantially all of the Company's assets or into or with which the Company is merged and consolidated. 9. WAIVER. The waiver of a breach of any provision of this Agreement by a party shall not be construed as a waiver of any subsequent breach by said party. 10. SEVERABILITY. If any clause, phrase, provision, or portion of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable under any applicable law, such event shall not affect or render invalid or unenforceable the remained of this Agreement and shall not affect the application of any clause, provision, or portion hereof to other persons or circumstances. 9 11. ARBITRATION. (a) The terms of this Paragraph 11 contain the sole and exclusive method, means and procedure to resolve any and all claims, disputes or disagreements arising under this Agreement, except those arising under the provisions of Paragraph 6, above. Nothing in this Paragraph 11 shall prohibit a party from seeking and obtaining injunctive relief from a court of competent jurisdiction pending the outcome of arbitration. A party bringing an action for injunctive relief shall not be deemed to have waived his or its right to demand arbitration of all disputes. The parties irrevocably waive any and all rights to the contrary and shall at all times conduct themselves in accordance with the terms of this Paragraph 11; any attempt to circumvent the terms of this Paragraph 11 shall be null and void and of force or effect. (b) Either party desiring to arbitrate shall give written notice to the other party within a reasonable period of time after the party becomes aware of the need for arbitration. The arbitration shall be conducted in Los Angeles, California, in accordance with the National Rules of the American Arbitration Association ("AAA"), and shall be conducted by a single arbitrator selected from the approved AAA panel or by stipulation of the parties. In any arbitration hereunder, the parties shall be entitled to all rights of discovery provided for in the California Code of Civil Procedure for judicial proceedings. The arbitrator shall give effect to statutes of limitation in determining any claim. The decision of the arbitrator shall be final and binding. Judgment on any award rendered by such arbitrator shall be final and binding. Judgment on any award rendered by such arbitrator may be entered in any court having jurisdiction over the subject matter of the controversy. The prevailing party shall receive an award of costs and expenses related to the arbitration, including attorneys' fees. The fees and costs of the arbitrator and the cost of any record or transcript of the arbitration shall be borne by the losing party. Should Officer or the Company institute any legal action or administrative proceeding with respect to any claim waived by this agreement or pursue any dispute or matter covered by this paragraph by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses and attorneys' fees incurred as a result of such action. 12. RELEVANT LAW. This Agreement shall be construes and enforced in accordance with the laws of the State of California. 13. NOTICES. All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch 10 United States Post Office, by registered or certified mail, postage prepaid, addressed as follows, or to such other address as shall have been designated in writing by the addressee: (a) if to the Company: (b) if to the Officer: c/o eMarketplace, Inc. c/o Full Moon Interactive Group, Inc 255 West Julian Street 1111 Tamarind Avenue Suite 100 Hollywood, CA 90038 San Jose, CA 95110 Facsimile (323) 856-3011 Facsimile (408) 275-1958 14. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties and supersedes all prior agreements, arrangements, and communications, whether oral or written, pertaining to the subject matter hereof; and this Agreement shall not be modified or amended except by written agreement of the Company and Officer. 15. ATTORNEY'S FEES. If any action or proceeding is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover as an element of its cost, and not its damages, its reasonable attorneys' fees, costs and expenses. 16. HEADINGS. The subject heading of the paragraphs and subparagraphs of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth above. EMPLOYER: TOPTEAM, INC. EMPLOYEE: ROBERT WILSON BY: /s/ ROBERT WALLACE BY: /s/ ROBERT WILSON ------------------------ ---------------------- OFFICER: CHAIRMAN DATE: DATE: 11 -----END PRIVACY-ENHANCED MESSAGE-----